Correlation Between Gran Tierra and Advantage Oil

Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Advantage Oil 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 Gran Tierra and Advantage Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gran Tierra Energy and Advantage Oil Gas, you can compare the effects of market volatilities on Gran Tierra and Advantage Oil 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 Gran Tierra with a short position of Advantage Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Advantage Oil.

Diversification Opportunities for Gran Tierra and Advantage Oil

0.71

Correlation Coefficient

Gran Tierra  Advantage Oil

Poor diversification

The 3 months correlation between Gran and Advantage is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Advantage Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Oil Gas and Gran Tierra 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 Gran Tierra Energy are associated (or correlated) with Advantage Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Oil Gas has no effect on the direction of Gran Tierra i.e., Gran Tierra and Advantage Oil go up and down completely randomly.

Pair Corralation between Gran Tierra and Advantage Oil

Assuming the 90 days trading horizon Gran Tierra is expected to generate 3.31 times less return on investment than Advantage Oil. In addition to that, Gran Tierra is 1.9 times more volatile than Advantage Oil Gas. It trades about 0.01 of its total potential returns per unit of risk. Advantage Oil Gas is currently generating about 0.05 per unit of volatility. If you would invest  1,018  in Advantage Oil Gas on April 24, 2025 and sell it today you would earn a total of  50.00  from holding Advantage Oil Gas or generate 4.91% return on investment over 90 days.

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

Gran Tierra Energy  vs.  Advantage Oil Gas

Gran Tierra Energy

Risk-Adjusted Performance

Weak

Over the last 90 days Gran Tierra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Gran Tierra is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Advantage Oil Gas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Oil Gas are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Advantage Oil is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gran Tierra and Advantage Oil

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

The idea behind Gran Tierra Energy and Advantage Oil Gas 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 Transaction History module to view history of all your transactions and understand their impact on performance.