Correlation Between ShaMaran Petroleum and Africa Energy
Can any of the company-specific risk be diversified away by investing in both ShaMaran Petroleum 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 ShaMaran Petroleum and Africa Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ShaMaran Petroleum Corp and Africa Energy Corp, you can compare the effects of market volatilities on ShaMaran Petroleum 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 ShaMaran Petroleum with a short position of Africa Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShaMaran Petroleum and Africa Energy.
Diversification Opportunities for ShaMaran Petroleum and Africa Energy
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ShaMaran and Africa is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp 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 ShaMaran Petroleum 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 ShaMaran Petroleum Corp 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 ShaMaran Petroleum i.e., ShaMaran Petroleum and Africa Energy go up and down completely randomly.
Pair Corralation between ShaMaran Petroleum and Africa Energy
Assuming the 90 days horizon ShaMaran Petroleum Corp is expected to generate 0.69 times more return on investment than Africa Energy. However, ShaMaran Petroleum Corp is 1.45 times less risky than Africa Energy. It trades about 0.25 of its potential returns per unit of risk. Africa Energy Corp is currently generating about 0.05 per unit of risk. If you would invest 8.00 in ShaMaran Petroleum Corp on September 1, 2024 and sell it today you would earn a total of 3.00 from holding ShaMaran Petroleum Corp or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ShaMaran Petroleum Corp vs. Africa Energy Corp
Performance |
| Timeline |
| ShaMaran Petroleum Corp |
| Africa Energy Corp |
ShaMaran Petroleum and Africa Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ShaMaran Petroleum and Africa Energy
The main advantage of trading using opposite ShaMaran Petroleum and Africa Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShaMaran Petroleum 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.| ShaMaran Petroleum vs. Journey Energy | ShaMaran Petroleum vs. Yangarra Resources | ShaMaran Petroleum vs. Obsidian Energy | ShaMaran Petroleum vs. Pine Cliff Energy |
| Africa Energy vs. Africa Oil Corp | Africa Energy vs. Eco Atlantic Oil | Africa Energy vs. Alvopetro Energy | Africa Energy 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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