Correlation Between Scorpio Tankers and Cheniere Energy

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Scorpio Tankers 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 Scorpio Tankers and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scorpio Tankers and Cheniere Energy, you can compare the effects of market volatilities on Scorpio Tankers 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 Scorpio Tankers with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scorpio Tankers and Cheniere Energy.

Diversification Opportunities for Scorpio Tankers and Cheniere Energy

ScorpioCheniereDiversified AwayScorpioCheniereDiversified Away100%
-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Scorpio and Cheniere is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Scorpio Tankers and Cheniere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy and Scorpio Tankers 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 Scorpio Tankers 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 has no effect on the direction of Scorpio Tankers i.e., Scorpio Tankers and Cheniere Energy go up and down completely randomly.

Pair Corralation between Scorpio Tankers and Cheniere Energy

Given the investment horizon of 90 days Scorpio Tankers is expected to under-perform the Cheniere Energy. In addition to that, Scorpio Tankers is 1.11 times more volatile than Cheniere Energy. It trades about -0.34 of its total potential returns per unit of risk. Cheniere Energy is currently generating about 0.17 per unit of volatility. If you would invest  18,957  in Cheniere Energy on October 5, 2024 and sell it today you would earn a total of  3,103  from holding Cheniere Energy or generate 16.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Scorpio Tankers  vs.  Cheniere Energy

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -30-20-1001020
JavaScript chart by amCharts 3.21.15STNG LNG
       Timeline  
Scorpio Tankers 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Scorpio Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan5055606570
Cheniere Energy 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan180190200210220

Scorpio Tankers and Cheniere Energy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.2-2.4-1.59-0.790.00.591.191.792.39 0.050.100.15
JavaScript chart by amCharts 3.21.15STNG LNG
       Returns  

Pair Trading with Scorpio Tankers and Cheniere Energy

The main advantage of trading using opposite Scorpio Tankers and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scorpio Tankers 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 Scorpio Tankers and Cheniere Energy 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.
Check out your portfolio center.
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

Other Complementary Tools

Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Stocks Directory
Find actively traded stocks across global markets