Correlation Between Kinetik Holdings and Dynagas LNG

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

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

Diversification Opportunities for Kinetik Holdings and Dynagas LNG

0.63

Correlation Coefficient

Kinetik Holdings  Dynagas LNG

Poor diversification

The 3 months correlation between Kinetik and Dynagas is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings 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 Kinetik Holdings 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 Kinetik Holdings 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 Kinetik Holdings i.e., Kinetik Holdings and Dynagas LNG go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Dynagas LNG

Given the investment horizon of 90 days Kinetik Holdings is expected to generate 1.04 times more return on investment than Dynagas LNG. However, Kinetik Holdings is 1.04 times more volatile than Dynagas LNG Partners. It trades about -0.05 of its potential returns per unit of risk. Dynagas LNG Partners is currently generating about -0.24 per unit of risk. If you would invest  5,591  in Kinetik Holdings on December 29, 2024 and sell it today you would lose (467.00) from holding Kinetik Holdings or give up 8.35% of portfolio value over 90 days.

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

Kinetik Holdings  vs.  Dynagas LNG Partners

Kinetik Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetik Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Dynagas LNG Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynagas LNG Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Kinetik Holdings and Dynagas LNG

The main advantage of trading using opposite Kinetik Holdings and Dynagas LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetik Holdings 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 Kinetik Holdings 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.