Correlation Between Scorpio Tankers and Avance Gas

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

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

Diversification Opportunities for Scorpio Tankers and Avance Gas

0.62

Correlation Coefficient

Scorpio Tankers  Avance Gas

Poor diversification

The 3 months correlation between Scorpio and Avance is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Scorpio Tankers 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 Scorpio Tankers 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 Scorpio Tankers 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 Scorpio Tankers i.e., Scorpio Tankers and Avance Gas go up and down completely randomly.

Pair Corralation between Scorpio Tankers and Avance Gas

Given the investment horizon of 90 days Scorpio Tankers is expected to generate 1.05 times less return on investment than Avance Gas. But when comparing it to its historical volatility, Scorpio Tankers is 1.44 times less risky than Avance Gas. It trades about 0.34 of its potential returns per unit of risk. Avance Gas Holding is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  685.00  in Avance Gas Holding on October 16, 2024 and sell it today you would earn a total of  125.00  from holding Avance Gas Holding or generate 18.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Scorpio Tankers  vs.  Avance Gas Holding

Scorpio Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scorpio Tankers 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 basic 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.

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 latest abnormal performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Scorpio Tankers and Avance Gas

The main advantage of trading using opposite Scorpio Tankers and Avance Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scorpio Tankers 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 Scorpio Tankers 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.