Correlation Between Keyera Corp and Avance Gas

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

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

Diversification Opportunities for Keyera Corp and Avance Gas

0.67

Correlation Coefficient

Keyera Corp  Avance Gas

Poor diversification

The 3 months correlation between Keyera and Avance is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Keyera Corp and Avance Gas Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avance Gas Holding and Keyera Corp 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 Keyera Corp are associated (or correlated) with Avance Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avance Gas Holding has no effect on the direction of Keyera Corp i.e., Keyera Corp and Avance Gas go up and down completely randomly.

Pair Corralation between Keyera Corp and Avance Gas

Assuming the 90 days horizon Keyera Corp is expected to generate 0.17 times more return on investment than Avance Gas. However, Keyera Corp is 5.94 times less risky than Avance Gas. It trades about -0.18 of its potential returns per unit of risk. Avance Gas Holding is currently generating about -0.14 per unit of risk. If you would invest  3,238  in Keyera Corp on October 2, 2024 and sell it today you would lose (166.00) from holding Keyera Corp or give up 5.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Keyera Corp  vs.  Avance Gas Holding

Keyera Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keyera Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Keyera Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 abnormal performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Keyera Corp and Avance Gas

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

The idea behind Keyera Corp and Avance Gas Holding 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.