Correlation Between DHT Holdings and FLEX LNG
Can any of the company-specific risk be diversified away by investing in both DHT Holdings and FLEX 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 DHT Holdings and FLEX LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DHT Holdings and FLEX LNG, you can compare the effects of market volatilities on DHT Holdings and FLEX 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 DHT Holdings with a short position of FLEX LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHT Holdings and FLEX LNG.
Diversification Opportunities for DHT Holdings and FLEX LNG
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DHT and FLEX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings and FLEX LNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLEX LNG and DHT Holdings 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 DHT Holdings are associated (or correlated) with FLEX LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLEX LNG has no effect on the direction of DHT Holdings i.e., DHT Holdings and FLEX LNG go up and down completely randomly.
Pair Corralation between DHT Holdings and FLEX LNG
Considering the 90-day investment horizon DHT Holdings is expected to under-perform the FLEX LNG. In addition to that, DHT Holdings is 1.09 times more volatile than FLEX LNG. It trades about -0.03 of its total potential returns per unit of risk. FLEX LNG is currently generating about 0.17 per unit of volatility. If you would invest 2,455 in FLEX LNG on August 24, 2024 and sell it today you would earn a total of 177.00 from holding FLEX LNG or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DHT Holdings vs. FLEX LNG
Performance |
| Timeline |
| DHT Holdings |
| FLEX LNG |
DHT Holdings and FLEX LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DHT Holdings and FLEX LNG
The main advantage of trading using opposite DHT Holdings and FLEX LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHT Holdings position performs unexpectedly, FLEX 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 FLEX LNG will offset losses from the drop in FLEX LNG's long position.| DHT Holdings vs. International Seaways | DHT Holdings vs. Ardmore Shpng | DHT Holdings vs. HUMANA INC | DHT Holdings vs. Aquagold International |
| FLEX LNG vs. Frontline | FLEX LNG vs. Torm PLC Class | FLEX LNG vs. Navigator Holdings | FLEX LNG vs. Teekay Tankers |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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