Correlation Between Africa Oil and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Africa Oil and CGX 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 CGX 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 CGX Energy, you can compare the effects of market volatilities on Africa Oil and CGX 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 CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and CGX Energy.
Diversification Opportunities for Africa Oil and CGX Energy
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Africa and CGX is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX 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 CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Africa Oil i.e., Africa Oil and CGX Energy go up and down completely randomly.
Pair Corralation between Africa Oil and CGX Energy
Assuming the 90 days horizon Africa Oil Corp is expected to generate 0.73 times more return on investment than CGX Energy. However, Africa Oil Corp is 1.37 times less risky than CGX Energy. It trades about 0.15 of its potential returns per unit of risk. CGX Energy is currently generating about 0.1 per unit of risk. If you would invest 128.00 in Africa Oil Corp on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Africa Oil Corp or generate 9.38% 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. CGX Energy
Performance |
| Timeline |
| Africa Oil Corp |
| CGX Energy |
Africa Oil and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and CGX Energy
The main advantage of trading using opposite Africa Oil and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, CGX 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 CGX Energy will offset losses from the drop in CGX Energy'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 |
| CGX Energy vs. Avanti Energy | CGX Energy vs. Desert Mountain Energy | CGX Energy vs. Royal Helium | CGX Energy vs. Eco Oil Gas |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |