Correlation Between FLEX LNG and Hunter Group
Can any of the company-specific risk be diversified away by investing in both FLEX LNG and Hunter Group 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 Hunter Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and Hunter Group ASA, you can compare the effects of market volatilities on FLEX LNG and Hunter Group 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 Hunter Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and Hunter Group.
Diversification Opportunities for FLEX LNG and Hunter Group
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FLEX and Hunter is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Hunter Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Group ASA 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 Hunter Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Group ASA has no effect on the direction of FLEX LNG i.e., FLEX LNG and Hunter Group go up and down completely randomly.
Pair Corralation between FLEX LNG and Hunter Group
Assuming the 90 days trading horizon FLEX LNG is expected to under-perform the Hunter Group. But the stock apears to be less risky and, when comparing its historical volatility, FLEX LNG is 4.93 times less risky than Hunter Group. The stock trades about -0.02 of its potential returns per unit of risk. The Hunter Group ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 277.00 in Hunter Group ASA on November 19, 2024 and sell it today you would lose (132.00) from holding Hunter Group ASA or give up 47.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLEX LNG vs. Hunter Group ASA
Performance |
| Timeline |
| FLEX LNG |
| Hunter Group ASA |
FLEX LNG and Hunter Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLEX LNG and Hunter Group
The main advantage of trading using opposite FLEX LNG and Hunter Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG position performs unexpectedly, Hunter Group 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 Hunter Group will offset losses from the drop in Hunter Group's long position.| FLEX LNG vs. BW LPG | FLEX LNG vs. Frontline | FLEX LNG vs. Golden Ocean Group | FLEX LNG vs. Avance Gas Holding |
| Hunter Group vs. Okeanis Eco Tankers | Hunter Group vs. Frontline | Hunter Group vs. BW LPG | Hunter Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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