Correlation Between Oceana and Avi
Can any of the company-specific risk be diversified away by investing in both Oceana and Avi 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 Oceana and Avi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceana and Avi, you can compare the effects of market volatilities on Oceana and Avi 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 Oceana with a short position of Avi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceana and Avi.
Diversification Opportunities for Oceana and Avi
Modest diversification
The 3 months correlation between Oceana and Avi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Oceana and Avi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avi and Oceana 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 Oceana are associated (or correlated) with Avi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avi has no effect on the direction of Oceana i.e., Oceana and Avi go up and down completely randomly.
Pair Corralation between Oceana and Avi
Assuming the 90 days trading horizon Oceana is expected to generate 0.52 times more return on investment than Avi. However, Oceana is 1.93 times less risky than Avi. It trades about -0.38 of its potential returns per unit of risk. Avi is currently generating about -0.31 per unit of risk. If you would invest 675,900 in Oceana on November 28, 2024 and sell it today you would lose (43,800) from holding Oceana or give up 6.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Oceana vs. Avi
Performance |
| Timeline |
| Oceana |
| Avi |
Oceana and Avi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceana and Avi
The main advantage of trading using opposite Oceana and Avi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceana position performs unexpectedly, Avi 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 Avi will offset losses from the drop in Avi's long position.| Oceana vs. HomeChoice Investments | Oceana vs. MC Mining | Oceana vs. Hosken Consolidated Investments | Oceana vs. Reinet Investments SCA |
| Avi vs. HomeChoice Investments | Avi vs. Nedbank Group | Avi vs. Reinet Investments SCA | Avi vs. Afine Investments |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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