Correlation Between Embellence Group and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Embellence Group 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 Embellence Group and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embellence Group AB and Africa Oil Corp, you can compare the effects of market volatilities on Embellence Group 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 Embellence Group with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embellence Group and Africa Oil.
Diversification Opportunities for Embellence Group and Africa Oil
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Embellence and Africa is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Embellence Group 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 Embellence Group 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 Embellence Group 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 Embellence Group i.e., Embellence Group and Africa Oil go up and down completely randomly.
Pair Corralation between Embellence Group and Africa Oil
Assuming the 90 days trading horizon Embellence Group AB is expected to generate 1.01 times more return on investment than Africa Oil. However, Embellence Group is 1.01 times more volatile than Africa Oil Corp. It trades about 0.05 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 1,958 in Embellence Group AB on August 27, 2024 and sell it today you would earn a total of 1,052 from holding Embellence Group AB or generate 53.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embellence Group AB vs. Africa Oil Corp
Performance |
| Timeline |
| Embellence Group |
| Africa Oil Corp |
Embellence Group and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embellence Group and Africa Oil
The main advantage of trading using opposite Embellence Group and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embellence Group 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.| Embellence Group vs. AB Electrolux | Embellence Group vs. Husqvarna AB | Embellence Group vs. Essity AB | Embellence Group vs. Dometic Group AB |
| Africa Oil vs. SolTech Energy Sweden | Africa Oil vs. Minesto AB | Africa Oil vs. SaltX Technology Holding | Africa Oil vs. Impact Coatings publ |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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