Correlation Between Petronor and Avance Gas

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

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

Diversification Opportunities for Petronor and Avance Gas

-0.85

Correlation Coefficient

Petronor  Avance Gas

Pay attention - limited upside

The 3 months correlation between Petronor and Avance is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Petronor EP 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 Petronor 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 Petronor EP 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 Petronor i.e., Petronor and Avance Gas go up and down completely randomly.

Pair Corralation between Petronor and Avance Gas

Assuming the 90 days trading horizon Petronor EP is expected to generate 0.22 times more return on investment than Avance Gas. However, Petronor EP is 4.62 times less risky than Avance Gas. It trades about 0.18 of its potential returns per unit of risk. Avance Gas Holding is currently generating about -0.26 per unit of risk. If you would invest  858.00  in Petronor EP on April 23, 2025 and sell it today you would earn a total of  250.00  from holding Petronor EP or generate 29.14% return on investment over 90 days.

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

Petronor EP  vs.  Avance Gas Holding

Petronor EP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petronor EP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Petronor disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Petronor and Avance Gas

The main advantage of trading using opposite Petronor and Avance Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronor 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 Petronor EP 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.