Correlation Between GasLog Partners and Frontline

Can any of the company-specific risk be diversified away by investing in both GasLog Partners and Frontline at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GasLog Partners and Frontline into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GasLog Partners LP and Frontline, you can compare the effects of market volatilities on GasLog Partners and Frontline and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GasLog Partners with a short position of Frontline. Check out your portfolio center. Please also check ongoing floating volatility patterns of GasLog Partners and Frontline.

Diversification Opportunities for GasLog Partners and Frontline

-0.6

Correlation Coefficient

GasLog Partners  Frontline

Excellent diversification

The 3 months correlation between GasLog and Frontline is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GasLog Partners LP and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and GasLog Partners is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GasLog Partners LP are associated (or correlated) with Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of GasLog Partners i.e., GasLog Partners and Frontline go up and down completely randomly.

Pair Corralation between GasLog Partners and Frontline

Assuming the 90 days trading horizon GasLog Partners is expected to generate 11.32 times less return on investment than Frontline. But when comparing it to its historical volatility, GasLog Partners LP is 6.88 times less risky than Frontline. It trades about 0.15 of its potential returns per unit of risk. Frontline is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,408  in Frontline on October 26, 2024 and sell it today you would earn a total of  277.00  from holding Frontline or generate 19.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

GasLog Partners LP  vs.  Frontline

GasLog Partners LP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GasLog Partners LP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, GasLog Partners is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Frontline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontline has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with GasLog Partners and Frontline

The main advantage of trading using opposite GasLog Partners and Frontline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GasLog Partners position performs unexpectedly, Frontline can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Frontline will offset losses from the drop in Frontline's long position.

The idea behind GasLog Partners LP and Frontline pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.