Correlation Between Mekonomen and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Mekonomen 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 Mekonomen and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mekonomen AB and Africa Oil Corp, you can compare the effects of market volatilities on Mekonomen 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 Mekonomen with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and Africa Oil.
Diversification Opportunities for Mekonomen and Africa Oil
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mekonomen and Africa is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen 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 Mekonomen 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 Mekonomen 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 Mekonomen i.e., Mekonomen and Africa Oil go up and down completely randomly.
Pair Corralation between Mekonomen and Africa Oil
Assuming the 90 days trading horizon Mekonomen AB is expected to generate 0.87 times more return on investment than Africa Oil. However, Mekonomen AB is 1.15 times less risky than Africa Oil. It trades about 0.03 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 10,982 in Mekonomen AB on August 24, 2024 and sell it today you would earn a total of 1,778 from holding Mekonomen AB or generate 16.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mekonomen AB vs. Africa Oil Corp
Performance |
| Timeline |
| Mekonomen AB |
| Africa Oil Corp |
Mekonomen and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mekonomen and Africa Oil
The main advantage of trading using opposite Mekonomen and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen 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.| Mekonomen vs. New Wave Group | Mekonomen vs. Clas Ohlson AB | Mekonomen vs. BE Group AB | Mekonomen vs. Betsson 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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