Correlation Between Avance Gas and FLEX LNG

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

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

Diversification Opportunities for Avance Gas and FLEX LNG

-0.01

Correlation Coefficient

Avance Gas  FLEX LNG

Good diversification

The 3 months correlation between Avance and FLEX is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Avance Gas Holding and FLEX LNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLEX LNG and Avance Gas 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 Avance Gas Holding are associated (or correlated) with FLEX LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLEX LNG has no effect on the direction of Avance Gas i.e., Avance Gas and FLEX LNG go up and down completely randomly.

Pair Corralation between Avance Gas and FLEX LNG

Assuming the 90 days trading horizon Avance Gas Holding is expected to under-perform the FLEX LNG. In addition to that, Avance Gas is 6.83 times more volatile than FLEX LNG. It trades about -0.26 of its total potential returns per unit of risk. FLEX LNG is currently generating about 0.0 per unit of volatility. If you would invest  23,457  in FLEX LNG on April 23, 2025 and sell it today you would lose (257.00) from holding FLEX LNG or give up 1.1% of portfolio value over 90 days.

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

Avance Gas Holding  vs.  FLEX LNG

Avance Gas Holding

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in August 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

FLEX LNG

Risk-Adjusted Performance

Very Weak

Over the last 90 days FLEX LNG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, FLEX LNG is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Avance Gas and FLEX LNG

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

The idea behind Avance Gas Holding and FLEX LNG 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.