Correlation Between Africa Oil and Athabasca Oil
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Athabasca Oil 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 Athabasca Oil 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 Athabasca Oil Corp, you can compare the effects of market volatilities on Africa Oil and Athabasca Oil 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 Athabasca Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Athabasca Oil.
Diversification Opportunities for Africa Oil and Athabasca Oil
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Africa and Athabasca is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Athabasca Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athabasca Oil 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 Athabasca Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athabasca Oil Corp has no effect on the direction of Africa Oil i.e., Africa Oil and Athabasca Oil go up and down completely randomly.
Pair Corralation between Africa Oil and Athabasca Oil
Assuming the 90 days horizon Africa Oil Corp is expected to under-perform the Athabasca Oil. But the pink sheet apears to be less risky and, when comparing its historical volatility, Africa Oil Corp is 1.05 times less risky than Athabasca Oil. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Athabasca Oil Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 223.00 in Athabasca Oil Corp on August 31, 2024 and sell it today you would earn a total of 142.00 from holding Athabasca Oil Corp or generate 63.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Africa Oil Corp vs. Athabasca Oil Corp
Performance |
| Timeline |
| Africa Oil Corp |
| Athabasca Oil Corp |
Africa Oil and Athabasca Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Athabasca Oil
The main advantage of trading using opposite Africa Oil and Athabasca Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Athabasca Oil 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 Athabasca Oil will offset losses from the drop in Athabasca Oil's long position.| Africa Oil vs. Petroleo Brasileiro Petrobras | Africa Oil vs. Equinor ASA ADR | Africa Oil vs. Eni SpA ADR | Africa Oil vs. YPF Sociedad Anonima |
| Athabasca Oil vs. Petroleo Brasileiro Petrobras | Athabasca Oil vs. Equinor ASA ADR | Athabasca Oil vs. Eni SpA ADR | Athabasca Oil vs. YPF Sociedad Anonima |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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