Correlation Between AB Electrolux and Africa Oil
Can any of the company-specific risk be diversified away by investing in both AB Electrolux 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 AB Electrolux and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Electrolux and Africa Oil Corp, you can compare the effects of market volatilities on AB Electrolux 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 AB Electrolux with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Electrolux and Africa Oil.
Diversification Opportunities for AB Electrolux and Africa Oil
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELUX-A and Africa is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AB Electrolux 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 AB Electrolux 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 AB Electrolux 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 AB Electrolux i.e., AB Electrolux and Africa Oil go up and down completely randomly.
Pair Corralation between AB Electrolux and Africa Oil
Assuming the 90 days trading horizon AB Electrolux is expected to generate 1.43 times more return on investment than Africa Oil. However, AB Electrolux is 1.43 times more volatile than Africa Oil Corp. It trades about 0.01 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 11,418 in AB Electrolux on November 5, 2024 and sell it today you would lose (118.00) from holding AB Electrolux or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Electrolux vs. Africa Oil Corp
Performance |
| Timeline |
| AB Electrolux |
| Africa Oil Corp |
AB Electrolux and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Electrolux and Africa Oil
The main advantage of trading using opposite AB Electrolux and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Electrolux 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.| AB Electrolux vs. AB Electrolux | AB Electrolux vs. Tele2 AB | AB Electrolux vs. Husqvarna AB | AB Electrolux vs. Kinnevik Investment 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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