Correlation Between Avance Gas and Green Plains

Can any of the company-specific risk be diversified away by investing in both Avance Gas and Green Plains 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 Avance Gas and Green Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avance Gas Holding and Green Plains Partners, you can compare the effects of market volatilities on Avance Gas and Green Plains 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 Avance Gas with a short position of Green Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avance Gas and Green Plains.

Diversification Opportunities for Avance Gas and Green Plains

-0.76

Correlation Coefficient

Avance Gas  Green Plains

Pay attention - limited upside

The 3 months correlation between Avance and Green is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Avance Gas Holding and Green Plains Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Plains Partners and Avance Gas 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 Avance Gas Holding are associated (or correlated) with Green Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Plains Partners has no effect on the direction of Avance Gas i.e., Avance Gas and Green Plains go up and down completely randomly.

Pair Corralation between Avance Gas and Green Plains

Assuming the 90 days horizon Avance Gas Holding is expected to generate 4.66 times more return on investment than Green Plains. However, Avance Gas is 4.66 times more volatile than Green Plains Partners. It trades about 0.05 of its potential returns per unit of risk. Green Plains Partners is currently generating about 0.13 per unit of risk. If you would invest  430.00  in Avance Gas Holding on October 5, 2024 and sell it today you would earn a total of  361.00  from holding Avance Gas Holding or generate 83.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	20.13%
Values	Daily Returns

Avance Gas Holding  vs.  Green Plains Partners

Avance Gas Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avance Gas Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Green Plains Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Plains Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Green Plains is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Avance Gas and Green Plains

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

The idea behind Avance Gas Holding and Green Plains Partners 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.