Correlation Between Africa Oil and Goodbye Kansas
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Goodbye Kansas 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 Goodbye Kansas 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 Goodbye Kansas Group, you can compare the effects of market volatilities on Africa Oil and Goodbye Kansas 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 Goodbye Kansas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Goodbye Kansas.
Diversification Opportunities for Africa Oil and Goodbye Kansas
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Africa and Goodbye is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Goodbye Kansas Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodbye Kansas Group 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 Goodbye Kansas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodbye Kansas Group has no effect on the direction of Africa Oil i.e., Africa Oil and Goodbye Kansas go up and down completely randomly.
Pair Corralation between Africa Oil and Goodbye Kansas
Assuming the 90 days trading horizon Africa Oil Corp is expected to under-perform the Goodbye Kansas. But the stock apears to be less risky and, when comparing its historical volatility, Africa Oil Corp is 2.56 times less risky than Goodbye Kansas. The stock trades about -0.27 of its potential returns per unit of risk. The Goodbye Kansas Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 134.00 in Goodbye Kansas Group on September 24, 2024 and sell it today you would earn a total of 13.00 from holding Goodbye Kansas Group or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Africa Oil Corp vs. Goodbye Kansas Group
Performance |
| Timeline |
| Africa Oil Corp |
| Goodbye Kansas Group |
Africa Oil and Goodbye Kansas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Goodbye Kansas
The main advantage of trading using opposite Africa Oil and Goodbye Kansas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Goodbye Kansas 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 Goodbye Kansas will offset losses from the drop in Goodbye Kansas' long position.| Africa Oil vs. GomSpace Group AB | Africa Oil vs. SaltX Technology Holding | Africa Oil vs. Ambu AS | Africa Oil vs. Fingerprint Cards AB |
| Goodbye Kansas vs. Modern Times Group | Goodbye Kansas vs. Millicom International Cellular | Goodbye Kansas vs. Tele2 AB | Goodbye Kansas vs. BHG 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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