Correlation Between Africa Oil and Surge Energy
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Surge Energy 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 Surge Energy 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 Surge Energy, you can compare the effects of market volatilities on Africa Oil and Surge Energy 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 Surge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Surge Energy.
Diversification Opportunities for Africa Oil and Surge Energy
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Africa and Surge is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Surge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Energy 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 Surge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Energy has no effect on the direction of Africa Oil i.e., Africa Oil and Surge Energy go up and down completely randomly.
Pair Corralation between Africa Oil and Surge Energy
Assuming the 90 days trading horizon Africa Oil Corp is expected to under-perform the Surge Energy. In addition to that, Africa Oil is 1.09 times more volatile than Surge Energy. It trades about -0.03 of its total potential returns per unit of risk. Surge Energy is currently generating about -0.03 per unit of volatility. If you would invest 800.00 in Surge Energy on November 28, 2024 and sell it today you would lose (263.00) from holding Surge Energy or give up 32.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Africa Oil Corp vs. Surge Energy
Performance |
| Timeline |
| Africa Oil Corp |
| Surge Energy |
Africa Oil and Surge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Surge Energy
The main advantage of trading using opposite Africa Oil and Surge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Surge Energy 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 Surge Energy will offset losses from the drop in Surge Energy's long position.| Africa Oil vs. Journey Energy | Africa Oil vs. Headwater Exploration | Africa Oil vs. Frontera Energy Corp | Africa Oil vs. International Petroleum Corp |
| Surge Energy vs. Whitecap Resources | Surge Energy vs. Cardinal Energy | Surge Energy vs. Athabasca Oil Corp | Surge Energy vs. Tamarack Valley 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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