Correlation Between Dorian LPG and TC Energy

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

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

Diversification Opportunities for Dorian LPG and TC Energy

0.36

Correlation Coefficient

Dorian LPG  TC Energy

Weak diversification

The 3 months correlation between Dorian and TRP is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dorian LPG and TC Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TC Energy 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 TC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TC Energy Corp has no effect on the direction of Dorian LPG i.e., Dorian LPG and TC Energy go up and down completely randomly.

Pair Corralation between Dorian LPG and TC Energy

Considering the 90-day investment horizon Dorian LPG is expected to generate 4.26 times less return on investment than TC Energy. In addition to that, Dorian LPG is 1.99 times more volatile than TC Energy Corp. It trades about 0.01 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.08 per unit of volatility. If you would invest  4,568  in TC Energy Corp on December 27, 2024 and sell it today you would earn a total of  277.00  from holding TC Energy Corp or generate 6.06% return on investment over 90 days.

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

Dorian LPG  vs.  TC Energy 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.

TC Energy Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, TC Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dorian LPG and TC Energy

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

The idea behind Dorian LPG and TC Energy 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.