Correlation Between Eastman Kodak and Cheniere Energy

Can any of the company-specific risk be diversified away by investing in both Eastman Kodak and Cheniere Energy 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 Eastman Kodak and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastman Kodak Co and Cheniere Energy Partners, you can compare the effects of market volatilities on Eastman Kodak and Cheniere Energy 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 Eastman Kodak with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Kodak and Cheniere Energy.

Diversification Opportunities for Eastman Kodak and Cheniere Energy

0.84

Correlation Coefficient

Eastman Kodak  Cheniere Energy

Very poor diversification

The 3 months correlation between Eastman and Cheniere is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Kodak Co and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and Eastman Kodak 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 Eastman Kodak Co are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Eastman Kodak i.e., Eastman Kodak and Cheniere Energy go up and down completely randomly.

Pair Corralation between Eastman Kodak and Cheniere Energy

Given the investment horizon of 90 days Eastman Kodak Co is expected to generate 2.22 times more return on investment than Cheniere Energy. However, Eastman Kodak is 2.22 times more volatile than Cheniere Energy Partners. It trades about 0.12 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about -0.09 per unit of risk. If you would invest  625.00  in Eastman Kodak Co on September 24, 2024 and sell it today you would earn a total of  60.00  from holding Eastman Kodak Co or generate 9.6% return on investment over 90 days.

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

Eastman Kodak Co  vs.  Cheniere Energy Partners

Eastman Kodak

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Kodak Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Eastman Kodak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cheniere Energy Partners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cheniere Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eastman Kodak and Cheniere Energy

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

The idea behind Eastman Kodak Co and Cheniere Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.