Correlation Between Arctic Blue and Africa Energy
Can any of the company-specific risk be diversified away by investing in both Arctic Blue and Africa 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 Arctic Blue and Africa Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Blue Beverages and Africa Energy Corp, you can compare the effects of market volatilities on Arctic Blue and Africa 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 Arctic Blue with a short position of Africa Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Blue and Africa Energy.
Diversification Opportunities for Arctic Blue and Africa Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arctic and Africa is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Blue Beverages and Africa Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Energy Corp and Arctic Blue 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 Blue Beverages are associated (or correlated) with Africa Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Energy Corp has no effect on the direction of Arctic Blue i.e., Arctic Blue and Africa Energy go up and down completely randomly.
Pair Corralation between Arctic Blue and Africa Energy
Assuming the 90 days trading horizon Arctic Blue Beverages is expected to generate 1.62 times more return on investment than Africa Energy. However, Arctic Blue is 1.62 times more volatile than Africa Energy Corp. It trades about 0.07 of its potential returns per unit of risk. Africa Energy Corp is currently generating about -0.01 per unit of risk. If you would invest 63.00 in Arctic Blue Beverages on November 30, 2024 and sell it today you would earn a total of 109.00 from holding Arctic Blue Beverages or generate 173.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arctic Blue Beverages vs. Africa Energy Corp
Performance |
| Timeline |
| Arctic Blue Beverages |
| Africa Energy Corp |
Arctic Blue and Africa Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arctic Blue and Africa Energy
The main advantage of trading using opposite Arctic Blue and Africa Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Blue position performs unexpectedly, Africa 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 Africa Energy will offset losses from the drop in Africa Energy's long position.| Arctic Blue vs. Lundin Mining | Arctic Blue vs. Svenska Handelsbanken AB | Arctic Blue vs. Scout Gaming Group | Arctic Blue vs. Online Brands Nordic |
| Africa Energy vs. Bio Works Technologies AB | Africa Energy vs. New Nordic Healthbrands | Africa Energy vs. TradeDoubler AB | Africa Energy vs. Raketech Group Holding |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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