Correlation Between ASSA ABLOY and Africa Oil
Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY 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 ASSA ABLOY and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASSA ABLOY AB and Africa Oil Corp, you can compare the effects of market volatilities on ASSA ABLOY 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 ASSA ABLOY with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and Africa Oil.
Diversification Opportunities for ASSA ABLOY and Africa Oil
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ASSA and Africa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB 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 ASSA ABLOY 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 ASSA ABLOY AB 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 ASSA ABLOY i.e., ASSA ABLOY and Africa Oil go up and down completely randomly.
Pair Corralation between ASSA ABLOY and Africa Oil
Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.53 times more return on investment than Africa Oil. However, ASSA ABLOY AB is 1.89 times less risky than Africa Oil. It trades about 0.08 of its potential returns per unit of risk. Africa Oil Corp is currently generating about -0.03 per unit of risk. If you would invest 27,940 in ASSA ABLOY AB on November 5, 2024 and sell it today you would earn a total of 6,120 from holding ASSA ABLOY AB or generate 21.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASSA ABLOY AB vs. Africa Oil Corp
Performance |
| Timeline |
| ASSA ABLOY AB |
| Africa Oil Corp |
ASSA ABLOY and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSA ABLOY and Africa Oil
The main advantage of trading using opposite ASSA ABLOY and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY 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.| ASSA ABLOY vs. Atlas Copco AB | ASSA ABLOY vs. Sandvik AB | ASSA ABLOY vs. Alfa Laval AB | ASSA ABLOY vs. AB SKF |
| Africa Oil vs. International Petroleum | Africa Oil vs. Africa Energy Corp | Africa Oil vs. Africa Oil Corp | Africa Oil vs. Lundin Mining |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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