Correlation Between Africa Oil and Brilliant Future
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Brilliant Future 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 Brilliant Future 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 Brilliant Future AB, you can compare the effects of market volatilities on Africa Oil and Brilliant Future 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 Brilliant Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Brilliant Future.
Diversification Opportunities for Africa Oil and Brilliant Future
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Africa and Brilliant is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Brilliant Future AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brilliant Future 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 Brilliant Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brilliant Future has no effect on the direction of Africa Oil i.e., Africa Oil and Brilliant Future go up and down completely randomly.
Pair Corralation between Africa Oil and Brilliant Future
Assuming the 90 days trading horizon Africa Oil Corp is expected to generate 0.91 times more return on investment than Brilliant Future. However, Africa Oil Corp is 1.1 times less risky than Brilliant Future. It trades about -0.01 of its potential returns per unit of risk. Brilliant Future AB is currently generating about -0.02 per unit of risk. If you would invest 1,986 in Africa Oil Corp on August 27, 2024 and sell it today you would lose (373.00) from holding Africa Oil Corp or give up 18.78% 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. Brilliant Future AB
Performance |
| Timeline |
| Africa Oil Corp |
| Brilliant Future |
Africa Oil and Brilliant Future Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Brilliant Future
The main advantage of trading using opposite Africa Oil and Brilliant Future positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Brilliant Future 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 Brilliant Future will offset losses from the drop in Brilliant Future's long position.| Africa Oil vs. SolTech Energy Sweden | Africa Oil vs. Minesto AB | Africa Oil vs. SaltX Technology Holding | Africa Oil vs. Impact Coatings publ |
| Brilliant Future vs. VIMAB Group AB | Brilliant Future vs. Enersize Oy | Brilliant Future vs. Mekonomen AB | Brilliant Future vs. Embellence Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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