Correlation Between Dynagas LNG and Ardmore Shpng

Can any of the company-specific risk be diversified away by investing in both Dynagas LNG and Ardmore Shpng 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 Dynagas LNG and Ardmore Shpng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dynagas LNG Partners and Ardmore Shpng, you can compare the effects of market volatilities on Dynagas LNG and Ardmore Shpng 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 Dynagas LNG with a short position of Ardmore Shpng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynagas LNG and Ardmore Shpng.

Diversification Opportunities for Dynagas LNG and Ardmore Shpng

-0.77

Correlation Coefficient

Dynagas LNG  Ardmore Shpng

Pay attention - limited upside

The 3 months correlation between Dynagas and Ardmore is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG Partners and Ardmore Shpng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardmore Shpng and Dynagas 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 Dynagas LNG Partners are associated (or correlated) with Ardmore Shpng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardmore Shpng has no effect on the direction of Dynagas LNG i.e., Dynagas LNG and Ardmore Shpng go up and down completely randomly.

Pair Corralation between Dynagas LNG and Ardmore Shpng

Given the investment horizon of 90 days Dynagas LNG Partners is expected to generate 1.21 times more return on investment than Ardmore Shpng. However, Dynagas LNG is 1.21 times more volatile than Ardmore Shpng. It trades about 0.14 of its potential returns per unit of risk. Ardmore Shpng is currently generating about -0.28 per unit of risk. If you would invest  365.00  in Dynagas LNG Partners on September 12, 2024 and sell it today you would earn a total of  79.00  from holding Dynagas LNG Partners or generate 21.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dynagas LNG Partners  vs.  Ardmore Shpng

Dynagas LNG Partners

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dynagas LNG Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dynagas LNG reported solid returns over the last few months and may actually be approaching a breakup point.

Ardmore Shpng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardmore Shpng has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Dynagas LNG and Ardmore Shpng

The main advantage of trading using opposite Dynagas LNG and Ardmore Shpng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG position performs unexpectedly, Ardmore Shpng 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 Ardmore Shpng will offset losses from the drop in Ardmore Shpng's long position.

The idea behind Dynagas LNG Partners and Ardmore Shpng 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.