Correlation Between Africa Oil and Cell Impact
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Cell Impact 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 Cell Impact 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 Cell Impact AB, you can compare the effects of market volatilities on Africa Oil and Cell Impact 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 Cell Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Cell Impact.
Diversification Opportunities for Africa Oil and Cell Impact
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Africa and Cell is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Cell Impact AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cell Impact 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 Cell Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cell Impact AB has no effect on the direction of Africa Oil i.e., Africa Oil and Cell Impact go up and down completely randomly.
Pair Corralation between Africa Oil and Cell Impact
Assuming the 90 days trading horizon Africa Oil Corp is expected to generate 0.62 times more return on investment than Cell Impact. However, Africa Oil Corp is 1.61 times less risky than Cell Impact. It trades about 0.24 of its potential returns per unit of risk. Cell Impact AB is currently generating about -0.25 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 172.00 from holding Africa Oil Corp or generate 12.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Africa Oil Corp vs. Cell Impact AB
Performance |
| Timeline |
| Africa Oil Corp |
| Cell Impact AB |
Africa Oil and Cell Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Cell Impact
The main advantage of trading using opposite Africa Oil and Cell Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Cell Impact 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 Cell Impact will offset losses from the drop in Cell Impact's long position.The idea behind Africa Oil Corp and Cell Impact AB 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.| Cell Impact vs. Impact Coatings publ | Cell Impact vs. Powercell Sweden | Cell Impact vs. Oncopeptides AB | Cell Impact vs. SaltX Technology Holding |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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