Correlation Between Cheniere Energy and Sassy Resources

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

Diversification Opportunities for Cheniere Energy and Sassy Resources

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Cheniere and Sassy is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and Sassy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sassy Resources and Cheniere Energy 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 Cheniere Energy Partners are associated (or correlated) with Sassy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sassy Resources has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and Sassy Resources go up and down completely randomly.

Pair Corralation between Cheniere Energy and Sassy Resources

Considering the 90-day investment horizon Cheniere Energy is expected to generate 8.06 times less return on investment than Sassy Resources. But when comparing it to its historical volatility, Cheniere Energy Partners is 10.81 times less risky than Sassy Resources. It trades about 0.05 of its potential returns per unit of risk. Sassy Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Sassy Resources on November 27, 2024 and sell it today you would lose (41.80) from holding Sassy Resources or give up 88.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.4%
ValuesDaily Returns

Cheniere Energy Partners  vs.  Sassy Resources

 Performance 
       Timeline  
Cheniere Energy Partners 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
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 reported solid returns over the last few months and may actually be approaching a breakup point.
Sassy Resources 

Risk-Adjusted Performance

Very Weak

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

Cheniere Energy and Sassy Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cheniere Energy and Sassy Resources

The main advantage of trading using opposite Cheniere Energy and Sassy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, Sassy Resources 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 Sassy Resources will offset losses from the drop in Sassy Resources' long position.
The idea behind Cheniere Energy Partners and Sassy Resources 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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