Correlation Between Marchex and Crown LNG

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

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

Diversification Opportunities for Marchex and Crown LNG

-0.18

Correlation Coefficient

Marchex  Crown LNG

Good diversification

The 3 months correlation between Marchex and Crown is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Crown LNG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown LNG Holdings and Marchex 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 Marchex are associated (or correlated) with Crown LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown LNG Holdings has no effect on the direction of Marchex i.e., Marchex and Crown LNG go up and down completely randomly.

Pair Corralation between Marchex and Crown LNG

Given the investment horizon of 90 days Marchex is expected to generate 0.52 times more return on investment than Crown LNG. However, Marchex is 1.93 times less risky than Crown LNG. It trades about 0.1 of its potential returns per unit of risk. Crown LNG Holdings is currently generating about 0.0 per unit of risk. If you would invest  181.00  in Marchex on September 12, 2024 and sell it today you would earn a total of  39.00  from holding Marchex or generate 21.55% return on investment over 90 days.

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

Marchex  vs.  Crown LNG Holdings

Marchex

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.

Crown LNG Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown LNG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Crown LNG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Marchex and Crown LNG

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

The idea behind Marchex and Crown LNG Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.