62.0 +0.1 (+0.16%) Sell

Joy for LNG investors as it performed better than the broader market

13 min read

CHENIERE ENERGY INC ranked better than it's peers on Thursday. It delivered +0.16% to close at 62.0. On a day when the overall market breadth was 35%, it closed higher than 7% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing LNG]

LNG is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for LNG's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -4.28%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to LNG.


LNG has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 8 Feb, 2016 to 22 Jun, 2018. Over the last 2 years 11 months and 9 days, LNG outperformed the SP500 index on 52% days.

During the last three months LNG delivered profits on 56% days. However, it still managed to end this period in a loss. It's best return during this period (of +3.58%) was on Thursday, 15 Nov, 2018. While it's worst loss in the same period (of -4.68%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 7 Dec, 2018 and went on till 13 Dec, 2018. This bullish trend returned +3.15% to investors.

During the last year LNG had 8 profitable months and 4 loss making months. Profitable number of months of LNG and SP500 index were the same. LNG significantly outperformed SP500 index in May 2018, when it returned +14.55% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. LNG had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year.

"All intelligent investing is value investing - acquiring more that you are paying for. You must value the business in order to value the stock.

LNG is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in LNG's volatility from 3 Oct, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that LNG has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in LNG derivatives at this moment can consider 'Married Put' options strategy to receive better risk-adjusted returns.

LNG has more chance of extreme outcomes than the SP500 index. Therefore, LNG must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than LNG.

On a general note (since you are interested in LNG), two instruments that have delivered similar performance as LNG are FDBC and PATK. They are suitable as good alternative investment candidates that can diversify your portfolio.

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