Correlation Between Golden Ocean and Avance Gas
Can any of the company-specific risk be diversified away by investing in both Golden Ocean 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 Golden Ocean and Avance Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Ocean Group and Avance Gas Holding, you can compare the effects of market volatilities on Golden Ocean 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 Golden Ocean with a short position of Avance Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Ocean and Avance Gas.
Diversification Opportunities for Golden Ocean and Avance Gas
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Golden and Avance is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ocean Group 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 Golden Ocean 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 Golden Ocean Group 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 Golden Ocean i.e., Golden Ocean and Avance Gas go up and down completely randomly.
Pair Corralation between Golden Ocean and Avance Gas
Assuming the 90 days trading horizon Golden Ocean Group is expected to generate 0.55 times more return on investment than Avance Gas. However, Golden Ocean Group is 1.82 times less risky than Avance Gas. It trades about 0.05 of its potential returns per unit of risk. Avance Gas Holding is currently generating about -0.02 per unit of risk. If you would invest 10,370 in Golden Ocean Group on November 4, 2024 and sell it today you would earn a total of 160.00 from holding Golden Ocean Group or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Ocean Group vs. Avance Gas Holding
Performance |
| Timeline |
| Golden Ocean Group |
| Avance Gas Holding |
Golden Ocean and Avance Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Ocean and Avance Gas
The main advantage of trading using opposite Golden Ocean and Avance Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Ocean 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.| Golden Ocean vs. Frontline | Golden Ocean vs. BW LPG | Golden Ocean vs. Jinhui Shipping and | Golden Ocean vs. FLEX LNG |
Check out your portfolio center.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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