Correlation Between Avance Gas and Marine Petroleum

Can any of the company-specific risk be diversified away by investing in both Avance Gas and Marine 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 Avance Gas and Marine Petroleum 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 Marine Petroleum Trust, you can compare the effects of market volatilities on Avance Gas and Marine 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 Avance Gas with a short position of Marine Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avance Gas and Marine Petroleum.

Diversification Opportunities for Avance Gas and Marine Petroleum

0.53

Correlation Coefficient

Avance Gas  Marine Petroleum

Very weak diversification

The 3 months correlation between Avance and Marine is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Avance Gas Holding and Marine Petroleum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Petroleum Trust 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 Marine Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Petroleum Trust has no effect on the direction of Avance Gas i.e., Avance Gas and Marine Petroleum go up and down completely randomly.

Pair Corralation between Avance Gas and Marine Petroleum

Assuming the 90 days horizon Avance Gas Holding is expected to generate 2.17 times more return on investment than Marine Petroleum. However, Avance Gas is 2.17 times more volatile than Marine Petroleum Trust. It trades about 0.05 of its potential returns per unit of risk. Marine Petroleum Trust is currently generating about -0.02 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 Together
Strength	Weak
Accuracy	99.34%
Values	Daily Returns

Avance Gas Holding  vs.  Marine Petroleum Trust

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.

Marine Petroleum Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Petroleum Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Avance Gas and Marine Petroleum

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

The idea behind Avance Gas Holding and Marine Petroleum Trust 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.