Correlation Between Africa Oil and Solid Impact
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Solid 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 Solid 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 Solid Impact Investments, you can compare the effects of market volatilities on Africa Oil and Solid 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 Solid Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Solid Impact.
Diversification Opportunities for Africa Oil and Solid Impact
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Africa and Solid is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Solid Impact Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Impact Investments 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 Solid Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Impact Investments has no effect on the direction of Africa Oil i.e., Africa Oil and Solid Impact go up and down completely randomly.
Pair Corralation between Africa Oil and Solid Impact
Assuming the 90 days trading horizon Africa Oil Corp is expected to generate 0.73 times more return on investment than Solid Impact. However, Africa Oil Corp is 1.38 times less risky than Solid Impact. It trades about -0.06 of its potential returns per unit of risk. Solid Impact Investments is currently generating about -0.09 per unit of risk. If you would invest 243.00 in Africa Oil Corp on September 2, 2024 and sell it today you would lose (46.00) from holding Africa Oil Corp or give up 18.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Africa Oil Corp vs. Solid Impact Investments
Performance |
| Timeline |
| Africa Oil Corp |
| Solid Impact Investments |
Africa Oil and Solid Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Solid Impact
The main advantage of trading using opposite Africa Oil and Solid Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Solid 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 Solid Impact will offset losses from the drop in Solid Impact's long position.The idea behind Africa Oil Corp and Solid Impact Investments 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.| Solid Impact vs. NovaGold Resources | Solid Impact vs. HPQ Silicon Resources | Solid Impact vs. Eastwood Bio Medical Canada | Solid Impact vs. Diamond Fields Resources |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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