Correlation Between Pine Cliff and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Pine Cliff 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 Pine Cliff and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pine Cliff Energy and Africa Oil Corp, you can compare the effects of market volatilities on Pine Cliff 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 Pine Cliff with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and Africa Oil.
Diversification Opportunities for Pine Cliff and Africa Oil
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pine and Africa is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy 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 Pine Cliff 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 Pine Cliff Energy 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 Pine Cliff i.e., Pine Cliff and Africa Oil go up and down completely randomly.
Pair Corralation between Pine Cliff and Africa Oil
Assuming the 90 days trading horizon Pine Cliff is expected to generate 1.79 times less return on investment than Africa Oil. In addition to that, Pine Cliff is 1.06 times more volatile than Africa Oil Corp. It trades about 0.07 of its total potential returns per unit of risk. Africa Oil Corp is currently generating about 0.14 per unit of volatility. If you would invest 184.00 in Africa Oil Corp on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Africa Oil Corp or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pine Cliff Energy vs. Africa Oil Corp
Performance |
| Timeline |
| Pine Cliff Energy |
| Africa Oil Corp |
Pine Cliff and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pine Cliff and Africa Oil
The main advantage of trading using opposite Pine Cliff and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pine Cliff 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.| Pine Cliff vs. Gear Energy | Pine Cliff vs. Headwater Exploration | Pine Cliff vs. Cardinal Energy | Pine Cliff vs. Journey Energy |
| Africa Oil vs. Gear Energy | Africa Oil vs. Journey Energy | Africa Oil vs. Headwater Exploration | Africa Oil vs. Frontera Energy 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 Stocks Directory module to find actively traded stocks across global markets.
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