Correlation Between Dorel Industries and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Dorel Industries 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 Dorel Industries and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and Africa Oil Corp, you can compare the effects of market volatilities on Dorel Industries 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 Dorel Industries with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Africa Oil.
Diversification Opportunities for Dorel Industries and Africa Oil
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dorel and Africa is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries 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 Dorel Industries 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 Dorel Industries 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 Dorel Industries i.e., Dorel Industries and Africa Oil go up and down completely randomly.
Pair Corralation between Dorel Industries and Africa Oil
Assuming the 90 days trading horizon Dorel Industries is expected to generate 1.31 times more return on investment than Africa Oil. However, Dorel Industries is 1.31 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 -0.01 per unit of risk. If you would invest 526.00 in Dorel Industries on September 3, 2024 and sell it today you would lose (83.00) from holding Dorel Industries or give up 15.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorel Industries vs. Africa Oil Corp
Performance |
| Timeline |
| Dorel Industries |
| Africa Oil Corp |
Dorel Industries and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and Africa Oil
The main advantage of trading using opposite Dorel Industries and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries 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.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
| Africa Oil vs. Gear Energy | Africa Oil vs. Journey Energy | Africa Oil vs. Headwater Exploration | Africa Oil vs. Frontera Energy Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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