Correlation Between FLEX LNG and Golden Ocean
Can any of the company-specific risk be diversified away by investing in both FLEX LNG and Golden Ocean 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 FLEX LNG and Golden Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and Golden Ocean Group, you can compare the effects of market volatilities on FLEX LNG and Golden Ocean 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 FLEX LNG with a short position of Golden Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and Golden Ocean.
Diversification Opportunities for FLEX LNG and Golden Ocean
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between FLEX and Golden is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group and FLEX LNG 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 FLEX LNG are associated (or correlated) with Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of FLEX LNG i.e., FLEX LNG and Golden Ocean go up and down completely randomly.
Pair Corralation between FLEX LNG and Golden Ocean
Assuming the 90 days trading horizon FLEX LNG is expected to generate 1.06 times more return on investment than Golden Ocean. However, FLEX LNG is 1.06 times more volatile than Golden Ocean Group. It trades about 0.12 of its potential returns per unit of risk. Golden Ocean Group is currently generating about 0.05 per unit of risk. If you would invest 27,680 in FLEX LNG on November 4, 2024 and sell it today you would earn a total of 1,300 from holding FLEX LNG or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLEX LNG vs. Golden Ocean Group
Performance |
| Timeline |
| FLEX LNG |
| Golden Ocean Group |
FLEX LNG and Golden Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLEX LNG and Golden Ocean
The main advantage of trading using opposite FLEX LNG and Golden Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG position performs unexpectedly, Golden Ocean 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 Golden Ocean will offset losses from the drop in Golden Ocean's long position.| FLEX LNG vs. BW LPG | FLEX LNG vs. Frontline | FLEX LNG vs. Golden Ocean Group | FLEX LNG vs. Avance Gas Holding |
| Golden Ocean vs. Frontline | Golden Ocean vs. BW LPG | Golden Ocean vs. Jinhui Shipping and | Golden Ocean vs. FLEX LNG |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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