Correlation Between International Seaways and Avance Gas
Can any of the company-specific risk be diversified away by investing in both International Seaways 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 International Seaways and Avance Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Seaways and Avance Gas Holding, you can compare the effects of market volatilities on International Seaways 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 International Seaways with a short position of Avance Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Seaways and Avance Gas.
Diversification Opportunities for International Seaways and Avance Gas
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Avance is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding International Seaways 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 International Seaways 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 International Seaways 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 International Seaways i.e., International Seaways and Avance Gas go up and down completely randomly.
Pair Corralation between International Seaways and Avance Gas
Given the investment horizon of 90 days International Seaways is expected to under-perform the Avance Gas. But the stock apears to be less risky and, when comparing its historical volatility, International Seaways is 1.68 times less risky than Avance Gas. The stock trades about -0.33 of its potential returns per unit of risk. The Avance Gas Holding is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 921.00 in Avance Gas Holding on September 2, 2024 and sell it today you would earn a total of 121.00 from holding Avance Gas Holding or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Seaways vs. Avance Gas Holding
Performance |
| Timeline |
| International Seaways |
| Avance Gas Holding |
International Seaways and Avance Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Seaways and Avance Gas
The main advantage of trading using opposite International Seaways and Avance Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Seaways 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.| International Seaways vs. Teekay Tankers | International Seaways vs. Frontline | International Seaways vs. DHT Holdings | International Seaways vs. Scorpio Tankers |
| Avance Gas vs. International Seaways | Avance Gas vs. Scorpio Tankers | Avance Gas vs. Dorian LPG | Avance Gas vs. Teekay Tankers |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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