Correlation Between Avensia Publ and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Avensia Publ 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 Avensia Publ and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avensia publ AB and Africa Oil Corp, you can compare the effects of market volatilities on Avensia Publ 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 Avensia Publ with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avensia Publ and Africa Oil.
Diversification Opportunities for Avensia Publ and Africa Oil
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avensia and Africa is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Avensia publ 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 Avensia Publ 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 Avensia publ 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 Avensia Publ i.e., Avensia Publ and Africa Oil go up and down completely randomly.
Pair Corralation between Avensia Publ and Africa Oil
Assuming the 90 days trading horizon Avensia publ AB is expected to generate 1.22 times more return on investment than Africa Oil. However, Avensia Publ is 1.22 times more volatile than Africa Oil Corp. It trades about 0.0 of its potential returns per unit of risk. Africa Oil Corp is currently generating about -0.06 per unit of risk. If you would invest 848.00 in Avensia publ AB on August 29, 2024 and sell it today you would lose (66.00) from holding Avensia publ AB or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avensia publ AB vs. Africa Oil Corp
Performance |
| Timeline |
| Avensia publ AB |
| Africa Oil Corp |
Avensia Publ and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avensia Publ and Africa Oil
The main advantage of trading using opposite Avensia Publ and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avensia Publ 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.| Avensia Publ vs. FormPipe Software AB | Avensia Publ vs. Micro Systemation AB | Avensia Publ vs. CTT Systems AB | Avensia Publ vs. CAG Group AB |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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