Correlation Between Africa Oil and Arctic Gold
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Arctic Gold 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 Africa Oil and Arctic Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Africa Oil Corp and Arctic Gold Publ, you can compare the effects of market volatilities on Africa Oil and Arctic Gold 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 Africa Oil with a short position of Arctic Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Arctic Gold.
Diversification Opportunities for Africa Oil and Arctic Gold
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Africa and Arctic is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Arctic Gold Publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Gold Publ and Africa Oil 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 Africa Oil Corp are associated (or correlated) with Arctic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Gold Publ has no effect on the direction of Africa Oil i.e., Africa Oil and Arctic Gold go up and down completely randomly.
Pair Corralation between Africa Oil and Arctic Gold
Assuming the 90 days trading horizon Africa Oil Corp is expected to under-perform the Arctic Gold. But the stock apears to be less risky and, when comparing its historical volatility, Africa Oil Corp is 3.0 times less risky than Arctic Gold. The stock trades about -0.06 of its potential returns per unit of risk. The Arctic Gold Publ is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Arctic Gold Publ on August 29, 2024 and sell it today you would lose (13.00) from holding Arctic Gold Publ or give up 32.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Africa Oil Corp vs. Arctic Gold Publ
Performance |
| Timeline |
| Africa Oil Corp |
| Arctic Gold Publ |
Africa Oil and Arctic Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Arctic Gold
The main advantage of trading using opposite Africa Oil and Arctic Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Arctic Gold 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 Arctic Gold will offset losses from the drop in Arctic Gold's long position.| Africa Oil vs. International Petroleum | Africa Oil vs. Africa Energy Corp | Africa Oil vs. Africa Oil Corp | Africa Oil vs. Lundin Mining |
| Arctic Gold vs. Bjorn Borg AB | Arctic Gold vs. Diadrom Holding AB | Arctic Gold vs. Anoto Group AB | Arctic Gold vs. Cloetta AB |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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