Correlation Between Berkshire Hathaway and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway 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 Berkshire Hathaway and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Africa Oil Corp, you can compare the effects of market volatilities on Berkshire Hathaway 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 Berkshire Hathaway with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Africa Oil.
Diversification Opportunities for Berkshire Hathaway and Africa Oil
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and Africa is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway i.e., Berkshire Hathaway and Africa Oil go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Africa Oil
Assuming the 90 days horizon Berkshire Hathaway is expected to under-perform the Africa Oil. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 4.18 times less risky than Africa Oil. The stock trades about -0.07 of its potential returns per unit of risk. The Africa Oil Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 129.00 in Africa Oil Corp on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Africa Oil Corp or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Africa Oil Corp
Performance |
| Timeline |
| Berkshire Hathaway |
| Africa Oil Corp |
Berkshire Hathaway and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Africa Oil
The main advantage of trading using opposite Berkshire Hathaway and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway 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.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Hartford Financial Services |
| Africa Oil vs. POSCO Holdings | Africa Oil vs. Schweizerische Nationalbank | Africa Oil vs. Berkshire Hathaway | Africa Oil vs. Berkshire Hathaway |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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