Correlation Between Dorian LPG and Pembina Pipeline

Can any of the company-specific risk be diversified away by investing in both Dorian LPG and Pembina Pipeline 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 Dorian LPG and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dorian LPG and Pembina Pipeline Corp, you can compare the effects of market volatilities on Dorian LPG and Pembina Pipeline 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 Dorian LPG with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorian LPG and Pembina Pipeline.

Diversification Opportunities for Dorian LPG and Pembina Pipeline

-0.27

Correlation Coefficient

Dorian LPG  Pembina Pipeline

Very good diversification

The 3 months correlation between Dorian and Pembina is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dorian LPG and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp and Dorian LPG 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 Dorian LPG are associated (or correlated) with Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Dorian LPG i.e., Dorian LPG and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Dorian LPG and Pembina Pipeline

Considering the 90-day investment horizon Dorian LPG is expected to under-perform the Pembina Pipeline. In addition to that, Dorian LPG is 1.92 times more volatile than Pembina Pipeline Corp. It trades about -0.02 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.12 per unit of volatility. If you would invest  3,631  in Pembina Pipeline Corp on December 28, 2024 and sell it today you would earn a total of  356.00  from holding Pembina Pipeline Corp or generate 9.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Dorian LPG  vs.  Pembina Pipeline Corp

Dorian LPG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dorian LPG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dorian LPG is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pembina Pipeline Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Pembina Pipeline may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dorian LPG and Pembina Pipeline

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

The idea behind Dorian LPG and Pembina Pipeline Corp 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.