Correlation Between Orca Energy and Africa Energy
Can any of the company-specific risk be diversified away by investing in both Orca Energy and Africa Energy 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 Orca Energy and Africa Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orca Energy Group and Africa Energy Corp, you can compare the effects of market volatilities on Orca Energy and Africa Energy 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 Orca Energy with a short position of Africa Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orca Energy and Africa Energy.
Diversification Opportunities for Orca Energy and Africa Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Orca and Africa is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Orca Energy Group and Africa Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Energy Corp and Orca Energy 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 Orca Energy Group are associated (or correlated) with Africa Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Energy Corp has no effect on the direction of Orca Energy i.e., Orca Energy and Africa Energy go up and down completely randomly.
Pair Corralation between Orca Energy and Africa Energy
Assuming the 90 days horizon Orca Energy Group is expected to generate 0.4 times more return on investment than Africa Energy. However, Orca Energy Group is 2.51 times less risky than Africa Energy. It trades about -0.03 of its potential returns per unit of risk. Africa Energy Corp is currently generating about -0.03 per unit of risk. If you would invest 283.00 in Orca Energy Group on September 3, 2024 and sell it today you would lose (78.00) from holding Orca Energy Group or give up 27.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.16% |
| Values | Daily Returns |
Orca Energy Group vs. Africa Energy Corp
Performance |
| Timeline |
| Orca Energy Group |
| Africa Energy Corp |
Orca Energy and Africa Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orca Energy and Africa Energy
The main advantage of trading using opposite Orca Energy and Africa Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orca Energy position performs unexpectedly, Africa Energy 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 Energy will offset losses from the drop in Africa Energy's long position.| Orca Energy vs. PetroShale | Orca Energy vs. Questerre Energy | Orca Energy vs. Petrus Resources | Orca Energy vs. Inpex Corp ADR |
| Africa Energy vs. PetroShale | Africa Energy vs. Horizon Oil Limited | Africa Energy vs. Saturn Oil Gas | Africa Energy vs. San Leon Energy |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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