Correlation Between Dorian LPG and SFL
Can any of the company-specific risk be diversified away by investing in both Dorian LPG and SFL 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 Dorian LPG and SFL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorian LPG and SFL Corporation, you can compare the effects of market volatilities on Dorian LPG and SFL 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 Dorian LPG with a short position of SFL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorian LPG and SFL.
Diversification Opportunities for Dorian LPG and SFL
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dorian and SFL is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dorian LPG and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation and Dorian LPG 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 Dorian LPG are associated (or correlated) with SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Dorian LPG i.e., Dorian LPG and SFL go up and down completely randomly.
Pair Corralation between Dorian LPG and SFL
Considering the 90-day investment horizon Dorian LPG is expected to generate 1.0 times more return on investment than SFL. However, Dorian LPG is 1.0 times less risky than SFL. It trades about -0.21 of its potential returns per unit of risk. SFL Corporation is currently generating about -0.39 per unit of risk. If you would invest 2,349 in Dorian LPG on December 8, 2024 and sell it today you would lose (250.00) from holding Dorian LPG or give up 10.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorian LPG vs. SFL Corp.
Performance |
| Timeline |
| Dorian LPG |
| SFL Corporation |
Dorian LPG and SFL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorian LPG and SFL
The main advantage of trading using opposite Dorian LPG and SFL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorian LPG position performs unexpectedly, SFL 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 SFL will offset losses from the drop in SFL's long position.| Dorian LPG vs. DHT Holdings | Dorian LPG vs. Scorpio Tankers | Dorian LPG vs. Teekay Tankers | Dorian LPG vs. Torm PLC Class |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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