Correlation Between African Discovery and BOC Aviation
Can any of the company-specific risk be diversified away by investing in both African Discovery and BOC Aviation 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 African Discovery and BOC Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Discovery Group and BOC Aviation Limited, you can compare the effects of market volatilities on African Discovery and BOC Aviation 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 African Discovery with a short position of BOC Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Discovery and BOC Aviation.
Diversification Opportunities for African Discovery and BOC Aviation
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between African and BOC is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding African Discovery Group and BOC Aviation Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Aviation Limited and African Discovery 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 African Discovery Group are associated (or correlated) with BOC Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Aviation Limited has no effect on the direction of African Discovery i.e., African Discovery and BOC Aviation go up and down completely randomly.
Pair Corralation between African Discovery and BOC Aviation
Given the investment horizon of 90 days African Discovery is expected to generate 2.26 times less return on investment than BOC Aviation. But when comparing it to its historical volatility, African Discovery Group is 1.36 times less risky than BOC Aviation. It trades about 0.05 of its potential returns per unit of risk. BOC Aviation Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 770.00 in BOC Aviation Limited on November 2, 2024 and sell it today you would lose (22.00) from holding BOC Aviation Limited or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.94% |
| Values | Daily Returns |
African Discovery Group vs. BOC Aviation Limited
Performance |
| Timeline |
| African Discovery |
| BOC Aviation Limited |
African Discovery and BOC Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Discovery and BOC Aviation
The main advantage of trading using opposite African Discovery and BOC Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Discovery position performs unexpectedly, BOC Aviation 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 BOC Aviation will offset losses from the drop in BOC Aviation's long position.| African Discovery vs. Black Diamond Group | African Discovery vs. Alta Equipment Group | African Discovery vs. Ashtead Group plc | African Discovery vs. BOC Aviation Limited |
| BOC Aviation vs. Alta Equipment Group | BOC Aviation vs. Black Diamond Group | BOC Aviation vs. Ashtead Group plc | BOC Aviation vs. African Discovery Group |
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.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stocks Directory Find actively traded stocks across global markets |