Correlation Between Media and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Media 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 Media and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and Africa Oil Corp, you can compare the effects of market volatilities on Media 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 Media with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Africa Oil.
Diversification Opportunities for Media and Africa Oil
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Media and Africa is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games 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 Media 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 Media and Games 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 Media i.e., Media and Africa Oil go up and down completely randomly.
Pair Corralation between Media and Africa Oil
Assuming the 90 days trading horizon Media and Games is expected to generate 2.26 times more return on investment than Africa Oil. However, Media is 2.26 times more volatile than Africa Oil Corp. It trades about 0.16 of its potential returns per unit of risk. Africa Oil Corp is currently generating about -0.07 per unit of risk. If you would invest 1,836 in Media and Games on September 2, 2024 and sell it today you would earn a total of 2,144 from holding Media and Games or generate 116.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media and Games vs. Africa Oil Corp
Performance |
| Timeline |
| Media and Games |
| Africa Oil Corp |
Media and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and Africa Oil
The main advantage of trading using opposite Media and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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.| Media vs. MilDef Group AB | Media vs. Fractal Gaming Group | Media vs. KABE Group AB | Media vs. IAR Systems Group |
| Africa Oil vs. International Petroleum | Africa Oil vs. Tethys Oil AB | Africa Oil vs. Africa Energy Corp | Africa Oil vs. ShaMaran Petroleum 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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