Correlation Between Navigator Holdings and Dorian LPG

Can any of the company-specific risk be diversified away by investing in both Navigator Holdings and Dorian LPG 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 Navigator Holdings and Dorian LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Navigator Holdings and Dorian LPG, you can compare the effects of market volatilities on Navigator Holdings and Dorian LPG 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 Navigator Holdings with a short position of Dorian LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navigator Holdings and Dorian LPG.

Diversification Opportunities for Navigator Holdings and Dorian LPG

0.37

Correlation Coefficient

Navigator Holdings  Dorian LPG

Weak diversification

The 3 months correlation between Navigator and Dorian is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Holdings and Dorian LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorian LPG and Navigator Holdings 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 Navigator Holdings are associated (or correlated) with Dorian LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorian LPG has no effect on the direction of Navigator Holdings i.e., Navigator Holdings and Dorian LPG go up and down completely randomly.

Pair Corralation between Navigator Holdings and Dorian LPG

Given the investment horizon of 90 days Navigator Holdings is expected to generate 0.75 times more return on investment than Dorian LPG. However, Navigator Holdings is 1.33 times less risky than Dorian LPG. It trades about -0.01 of its potential returns per unit of risk. Dorian LPG is currently generating about -0.29 per unit of risk. If you would invest  1,594  in Navigator Holdings on August 31, 2024 and sell it today you would lose (22.00) from holding Navigator Holdings or give up 1.38% of portfolio value over 90 days.

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

Navigator Holdings  vs.  Dorian LPG

Navigator Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navigator Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Navigator Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Dorian LPG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dorian LPG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Navigator Holdings and Dorian LPG

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

The idea behind Navigator Holdings and Dorian LPG 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.