Correlation Between Africa Oil and Spartan Delta
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Spartan Delta 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 Spartan Delta 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 Spartan Delta Corp, you can compare the effects of market volatilities on Africa Oil and Spartan Delta 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 Spartan Delta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Spartan Delta.
Diversification Opportunities for Africa Oil and Spartan Delta
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Africa and Spartan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Spartan Delta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spartan Delta Corp 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 Spartan Delta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spartan Delta Corp has no effect on the direction of Africa Oil i.e., Africa Oil and Spartan Delta go up and down completely randomly.
Pair Corralation between Africa Oil and Spartan Delta
Assuming the 90 days trading horizon Africa Oil Corp is expected to generate 1.07 times more return on investment than Spartan Delta. However, Africa Oil is 1.07 times more volatile than Spartan Delta Corp. It trades about 0.19 of its potential returns per unit of risk. Spartan Delta Corp is currently generating about 0.04 per unit of risk. If you would invest 177.00 in Africa Oil Corp on August 30, 2024 and sell it today you would earn a total of 20.00 from holding Africa Oil Corp or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Africa Oil Corp vs. Spartan Delta Corp
Performance |
| Timeline |
| Africa Oil Corp |
| Spartan Delta Corp |
Africa Oil and Spartan Delta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Spartan Delta
The main advantage of trading using opposite Africa Oil and Spartan Delta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Spartan Delta 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 Spartan Delta will offset losses from the drop in Spartan Delta's long position.| Africa Oil vs. Gear Energy | Africa Oil vs. Journey Energy | Africa Oil vs. Headwater Exploration | Africa Oil vs. Frontera Energy Corp |
| Spartan Delta vs. Headwater Exploration | Spartan Delta vs. Topaz Energy Corp | Spartan Delta vs. Pine Cliff Energy | Spartan Delta vs. Journey Energy |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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