Correlation Between MicroStrategy Incorporated and Avance Gas

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

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

Diversification Opportunities for MicroStrategy Incorporated and Avance Gas

-0.45

Correlation Coefficient

MicroStrategy Incorporated  Avance Gas

Very good diversification

The 3 months correlation between MicroStrategy and Avance is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated 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 MicroStrategy Incorporated 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 MicroStrategy Incorporated 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 MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Avance Gas go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Avance Gas

Given the investment horizon of 90 days MicroStrategy Incorporated is expected to generate 0.72 times more return on investment than Avance Gas. However, MicroStrategy Incorporated is 1.39 times less risky than Avance Gas. It trades about -0.1 of its potential returns per unit of risk. Avance Gas Holding is currently generating about -0.13 per unit of risk. If you would invest  38,884  in MicroStrategy Incorporated on September 28, 2024 and sell it today you would lose (6,154) from holding MicroStrategy Incorporated or give up 15.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MicroStrategy Incorporated  vs.  Avance Gas Holding

MicroStrategy Incorporated

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

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 MicroStrategy Incorporated and Avance Gas

The main advantage of trading using opposite MicroStrategy Incorporated and Avance Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroStrategy Incorporated 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 MicroStrategy Incorporated 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.