Correlation Between Humble Group and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Humble 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 Humble 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 Humble Group AB and Africa Oil Corp, you can compare the effects of market volatilities on Humble 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 Humble Group with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humble Group and Africa Oil.
Diversification Opportunities for Humble Group and Africa Oil
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Humble and Africa is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Humble 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 Humble 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 Humble 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 Humble Group i.e., Humble Group and Africa Oil go up and down completely randomly.
Pair Corralation between Humble Group and Africa Oil
Assuming the 90 days trading horizon Humble Group AB is expected to generate 1.95 times more return on investment than Africa Oil. However, Humble Group is 1.95 times more volatile than Africa Oil Corp. It trades about 0.26 of its potential returns per unit of risk. Africa Oil Corp is currently generating about -0.27 per unit of risk. If you would invest 1,038 in Humble Group AB on September 24, 2024 and sell it today you would earn a total of 179.00 from holding Humble Group AB or generate 17.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Humble Group AB vs. Africa Oil Corp
Performance |
| Timeline |
| Humble Group AB |
| Africa Oil Corp |
Humble Group and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humble Group and Africa Oil
The main advantage of trading using opposite Humble Group and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humble 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.| Humble Group vs. Samhllsbyggnadsbolaget i Norden | Humble Group vs. Media and Games | Humble Group vs. Hexatronic Group AB | Humble Group vs. Sinch AB |
| Africa Oil vs. GomSpace Group AB | Africa Oil vs. SaltX Technology Holding | Africa Oil vs. Ambu AS | Africa Oil vs. Fingerprint Cards 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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