Correlation Between Africa Oil and Boliden AB
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Boliden AB 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 Boliden AB 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 Boliden AB, you can compare the effects of market volatilities on Africa Oil and Boliden AB 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 Boliden AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Boliden AB.
Diversification Opportunities for Africa Oil and Boliden AB
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Africa and Boliden is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Boliden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden AB 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 Boliden AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boliden AB has no effect on the direction of Africa Oil i.e., Africa Oil and Boliden AB go up and down completely randomly.
Pair Corralation between Africa Oil and Boliden AB
Assuming the 90 days trading horizon Africa Oil Corp is expected to generate 1.1 times more return on investment than Boliden AB. However, Africa Oil is 1.1 times more volatile than Boliden AB. It trades about 0.25 of its potential returns per unit of risk. Boliden AB is currently generating about -0.1 per unit of risk. If you would invest 1,354 in Africa Oil Corp on August 30, 2024 and sell it today you would earn a total of 169.00 from holding Africa Oil Corp or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Africa Oil Corp vs. Boliden AB
Performance |
| Timeline |
| Africa Oil Corp |
| Boliden AB |
Africa Oil and Boliden AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Boliden AB
The main advantage of trading using opposite Africa Oil and Boliden AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Boliden AB 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 Boliden AB will offset losses from the drop in Boliden AB'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 |
| Boliden AB vs. Sandvik AB | Boliden AB vs. AB SKF | Boliden AB vs. Alfa Laval AB | Boliden AB vs. AB Electrolux |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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