Correlation Between Africa Oil and Real Matters
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Real Matters 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 Real Matters 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 Real Matters, you can compare the effects of market volatilities on Africa Oil and Real Matters 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 Real Matters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Real Matters.
Diversification Opportunities for Africa Oil and Real Matters
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Africa and Real is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Real Matters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Matters 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 Real Matters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Matters has no effect on the direction of Africa Oil i.e., Africa Oil and Real Matters go up and down completely randomly.
Pair Corralation between Africa Oil and Real Matters
Assuming the 90 days trading horizon Africa Oil Corp is expected to generate 2.34 times more return on investment than Real Matters. However, Africa Oil is 2.34 times more volatile than Real Matters. It trades about 0.06 of its potential returns per unit of risk. Real Matters is currently generating about -0.07 per unit of risk. If you would invest 163.00 in Africa Oil Corp on January 13, 2025 and sell it today you would earn a total of 7.00 from holding Africa Oil Corp or generate 4.29% 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. Real Matters
Performance |
| Timeline |
| Africa Oil Corp |
| Real Matters |
Africa Oil and Real Matters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Real Matters
The main advantage of trading using opposite Africa Oil and Real Matters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Real Matters 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 Real Matters will offset losses from the drop in Real Matters' long position.| Africa Oil vs. Prairie Provident Resources | Africa Oil vs. Vital Energy | Africa Oil vs. iShares Canadian HYBrid | Africa Oil vs. Altagas Cum Red |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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