Correlation Between FLEX LNG and Golar LNG
Can any of the company-specific risk be diversified away by investing in both FLEX LNG and Golar 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 FLEX LNG and Golar LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and Golar LNG Limited, you can compare the effects of market volatilities on FLEX LNG and Golar 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 FLEX LNG with a short position of Golar LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and Golar LNG.
Diversification Opportunities for FLEX LNG and Golar LNG
Very good diversification
The 3 months correlation between FLEX and Golar is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Golar LNG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golar LNG Limited 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 Golar LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golar LNG Limited has no effect on the direction of FLEX LNG i.e., FLEX LNG and Golar LNG go up and down completely randomly.
Pair Corralation between FLEX LNG and Golar LNG
Given the investment horizon of 90 days FLEX LNG is expected to under-perform the Golar LNG. But the stock apears to be less risky and, when comparing its historical volatility, FLEX LNG is 1.23 times less risky than Golar LNG. The stock trades about 0.0 of its potential returns per unit of risk. The Golar LNG Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,272 in Golar LNG Limited on August 27, 2024 and sell it today you would earn a total of 1,420 from holding Golar LNG Limited or generate 62.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLEX LNG vs. Golar LNG Limited
Performance |
| Timeline |
| FLEX LNG |
| Golar LNG Limited |
FLEX LNG and Golar LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLEX LNG and Golar LNG
The main advantage of trading using opposite FLEX LNG and Golar LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG position performs unexpectedly, Golar 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 Golar LNG will offset losses from the drop in Golar LNG's long position.| FLEX LNG vs. Ucommune International | FLEX LNG vs. Lion Financial Group | FLEX LNG vs. HUMANA INC | FLEX LNG vs. Aquagold International |
| Golar LNG vs. Teekay Tankers | Golar LNG vs. International Seaways | Golar LNG vs. Frontline | Golar LNG vs. DHT Holdings |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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