Correlation Between Torm PLC and Golar LNG
Can any of the company-specific risk be diversified away by investing in both Torm PLC 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 Torm PLC and Golar LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Torm PLC Class and Golar LNG Limited, you can compare the effects of market volatilities on Torm PLC 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 Torm PLC with a short position of Golar LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torm PLC and Golar LNG.
Diversification Opportunities for Torm PLC and Golar LNG
Excellent diversification
The 3 months correlation between Torm and Golar is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Torm PLC Class 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 Torm PLC 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 Torm PLC Class 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 Torm PLC i.e., Torm PLC and Golar LNG go up and down completely randomly.
Pair Corralation between Torm PLC and Golar LNG
Given the investment horizon of 90 days Torm PLC Class is expected to under-perform the Golar LNG. In addition to that, Torm PLC is 1.08 times more volatile than Golar LNG Limited. It trades about -0.17 of its total potential returns per unit of risk. Golar LNG Limited is currently generating about 0.1 per unit of volatility. If you would invest 3,204 in Golar LNG Limited on November 2, 2024 and sell it today you would earn a total of 776.00 from holding Golar LNG Limited or generate 24.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Torm PLC Class vs. Golar LNG Limited
Performance |
| Timeline |
| Torm PLC Class |
| Golar LNG Limited |
Torm PLC and Golar LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Torm PLC and Golar LNG
The main advantage of trading using opposite Torm PLC and Golar LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Torm PLC 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.The idea behind Torm PLC Class and Golar LNG Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| CEOs Directory Screen CEOs from public companies around the world |