Correlation Between Brilliant Future and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Brilliant Future 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 Brilliant Future and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brilliant Future AB and Africa Oil Corp, you can compare the effects of market volatilities on Brilliant Future 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 Brilliant Future with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Future and Africa Oil.
Diversification Opportunities for Brilliant Future and Africa Oil
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brilliant and Africa is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Future 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 Brilliant Future 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 Brilliant Future 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 Brilliant Future i.e., Brilliant Future and Africa Oil go up and down completely randomly.
Pair Corralation between Brilliant Future and Africa Oil
Assuming the 90 days trading horizon Brilliant Future AB is expected to under-perform the Africa Oil. But the stock apears to be less risky and, when comparing its historical volatility, Brilliant Future AB is 1.44 times less risky than Africa Oil. The stock trades about -0.22 of its potential returns per unit of risk. The Africa Oil Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,354 in Africa Oil Corp on August 30, 2024 and sell it today you would earn a total of 172.00 from holding Africa Oil Corp or generate 12.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Brilliant Future AB vs. Africa Oil Corp
Performance |
| Timeline |
| Brilliant Future |
| Africa Oil Corp |
Brilliant Future and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brilliant Future and Africa Oil
The main advantage of trading using opposite Brilliant Future and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brilliant Future 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.| Brilliant Future vs. Ekobot AB | Brilliant Future vs. Ayima Group AB | Brilliant Future vs. JonDeTech Sensors | Brilliant Future vs. Clean Motion AB |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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