Correlation Between Imperial Petroleum and Dynagas LNG

Can any of the company-specific risk be diversified away by investing in both Imperial Petroleum and Dynagas LNG 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 Imperial Petroleum and Dynagas LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Imperial Petroleum and Dynagas LNG Partners, you can compare the effects of market volatilities on Imperial Petroleum and Dynagas LNG 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 Imperial Petroleum with a short position of Dynagas LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and Dynagas LNG.

Diversification Opportunities for Imperial Petroleum and Dynagas LNG

-0.8

Correlation Coefficient

Imperial Petroleum  Dynagas LNG

Pay attention - limited upside

The 3 months correlation between Imperial and Dynagas is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners and Imperial Petroleum 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 Imperial Petroleum are associated (or correlated) with Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of Imperial Petroleum i.e., Imperial Petroleum and Dynagas LNG go up and down completely randomly.

Pair Corralation between Imperial Petroleum and Dynagas LNG

Given the investment horizon of 90 days Imperial Petroleum is expected to generate 1.11 times less return on investment than Dynagas LNG. In addition to that, Imperial Petroleum is 1.35 times more volatile than Dynagas LNG Partners. It trades about 0.07 of its total potential returns per unit of risk. Dynagas LNG Partners is currently generating about 0.11 per unit of volatility. If you would invest  259.00  in Dynagas LNG Partners on October 5, 2024 and sell it today you would earn a total of  289.00  from holding Dynagas LNG Partners or generate 111.58% return on investment over 90 days.

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

Imperial Petroleum  vs.  Dynagas LNG Partners

Imperial Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Dynagas LNG Partners

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynagas LNG Partners are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dynagas LNG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Imperial Petroleum and Dynagas LNG

The main advantage of trading using opposite Imperial Petroleum and Dynagas LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum position performs unexpectedly, Dynagas LNG 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 Dynagas LNG will offset losses from the drop in Dynagas LNG's long position.

The idea behind Imperial Petroleum and Dynagas LNG Partners 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.