Correlation Between GasLog Partners and Imperial Petroleum

Can any of the company-specific risk be diversified away by investing in both GasLog Partners and Imperial Petroleum 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 GasLog Partners and Imperial Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GasLog Partners LP and Imperial Petroleum Preferred, you can compare the effects of market volatilities on GasLog Partners and Imperial Petroleum 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 GasLog Partners with a short position of Imperial Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of GasLog Partners and Imperial Petroleum.

Diversification Opportunities for GasLog Partners and Imperial Petroleum

0.64

Correlation Coefficient

GasLog Partners  Imperial Petroleum

Poor diversification

The 3 months correlation between GasLog and Imperial is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GasLog Partners LP and Imperial Petroleum Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and GasLog Partners 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 GasLog Partners LP are associated (or correlated) with Imperial Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Petroleum has no effect on the direction of GasLog Partners i.e., GasLog Partners and Imperial Petroleum go up and down completely randomly.

Pair Corralation between GasLog Partners and Imperial Petroleum

Assuming the 90 days trading horizon GasLog Partners is expected to generate 2.15 times less return on investment than Imperial Petroleum. But when comparing it to its historical volatility, GasLog Partners LP is 1.12 times less risky than Imperial Petroleum. It trades about 0.07 of its potential returns per unit of risk. Imperial Petroleum Preferred is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,361  in Imperial Petroleum Preferred on September 2, 2024 and sell it today you would earn a total of  179.00  from holding Imperial Petroleum Preferred or generate 7.58% return on investment over 90 days.

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

GasLog Partners LP  vs.  Imperial Petroleum Preferred

GasLog Partners LP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GasLog Partners LP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, GasLog Partners is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Imperial Petroleum

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Petroleum Preferred are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Imperial Petroleum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GasLog Partners and Imperial Petroleum

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

The idea behind GasLog Partners LP and Imperial Petroleum Preferred 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.