Correlation Between Arctic Gold and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Arctic Gold and Africa 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 Arctic Gold and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Gold Publ and Africa Oil Corp, you can compare the effects of market volatilities on Arctic Gold and Africa 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 Arctic Gold with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Gold and Africa Oil.
Diversification Opportunities for Arctic Gold and Africa Oil
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arctic and Africa is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Gold Publ and Africa Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Oil Corp and Arctic Gold 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 Arctic Gold Publ are associated (or correlated) with Africa Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Oil Corp has no effect on the direction of Arctic Gold i.e., Arctic Gold and Africa Oil go up and down completely randomly.
Pair Corralation between Arctic Gold and Africa Oil
Assuming the 90 days trading horizon Arctic Gold Publ is expected to generate 2.62 times more return on investment than Africa Oil. However, Arctic Gold is 2.62 times more volatile than Africa Oil Corp. It trades about 0.01 of its potential returns per unit of risk. Africa Oil Corp is currently generating about -0.01 per unit of risk. If you would invest 52.00 in Arctic Gold Publ on August 26, 2024 and sell it today you would lose (23.00) from holding Arctic Gold Publ or give up 44.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arctic Gold Publ vs. Africa Oil Corp
Performance |
| Timeline |
| Arctic Gold Publ |
| Africa Oil Corp |
Arctic Gold and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arctic Gold and Africa Oil
The main advantage of trading using opposite Arctic Gold and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Gold position performs unexpectedly, Africa 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 Africa Oil will offset losses from the drop in Africa Oil's long position.| Arctic Gold vs. Svenska Aerogel Holding | Arctic Gold vs. Kancera AB | Arctic Gold vs. BIMobject AB | Arctic Gold vs. KABE Group AB |
| Africa Oil vs. SolTech Energy Sweden | Africa Oil vs. Minesto AB | Africa Oil vs. SaltX Technology Holding | Africa Oil vs. Impact Coatings publ |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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