Correlation Between Dorian LPG and International Seaways

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

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

Diversification Opportunities for Dorian LPG and International Seaways

0.88

Correlation Coefficient

Dorian LPG  International Seaways

Very poor diversification

The 3 months correlation between Dorian and International is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dorian LPG and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways 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 International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of Dorian LPG i.e., Dorian LPG and International Seaways go up and down completely randomly.

Pair Corralation between Dorian LPG and International Seaways

Considering the 90-day investment horizon Dorian LPG is expected to generate 1.11 times more return on investment than International Seaways. However, Dorian LPG is 1.11 times more volatile than International Seaways. It trades about 0.1 of its potential returns per unit of risk. International Seaways is currently generating about 0.11 per unit of risk. If you would invest  1,308  in Dorian LPG on February 21, 2024 and sell it today you would earn a total of  3,156  from holding Dorian LPG or generate 241.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Dorian LPG  vs.  International Seaways

Dorian LPG

Risk-Adjusted Performance

16 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dorian LPG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Dorian LPG reported solid returns over the last few months and may actually be approaching a breakup point.

International Seaways

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Seaways are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, International Seaways showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dorian LPG and International Seaways

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

The idea behind Dorian LPG and International Seaways 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.