Correlation Between ShaMaran Petroleum and Africa Oil
Can any of the company-specific risk be diversified away by investing in both ShaMaran Petroleum 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 ShaMaran Petroleum and Africa Oil 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 Oil Corp, you can compare the effects of market volatilities on ShaMaran Petroleum 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 ShaMaran Petroleum with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShaMaran Petroleum and Africa Oil.
Diversification Opportunities for ShaMaran Petroleum and Africa Oil
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ShaMaran and Africa is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp 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 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 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 ShaMaran Petroleum i.e., ShaMaran Petroleum and Africa Oil go up and down completely randomly.
Pair Corralation between ShaMaran Petroleum and Africa Oil
Assuming the 90 days horizon ShaMaran Petroleum Corp is expected to generate 2.48 times more return on investment than Africa Oil. However, ShaMaran Petroleum is 2.48 times more volatile than Africa Oil Corp. It trades about 0.24 of its potential returns per unit of risk. Africa Oil Corp is currently generating about 0.18 per unit of risk. If you would invest 8.00 in ShaMaran Petroleum Corp on August 30, 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ShaMaran Petroleum Corp vs. Africa Oil Corp
Performance |
| Timeline |
| ShaMaran Petroleum Corp |
| Africa Oil Corp |
ShaMaran Petroleum and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ShaMaran Petroleum and Africa Oil
The main advantage of trading using opposite ShaMaran Petroleum and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShaMaran Petroleum 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.| ShaMaran Petroleum vs. Africa Oil Corp | ShaMaran Petroleum vs. Africa Energy Corp | ShaMaran Petroleum vs. CGX Energy | ShaMaran Petroleum vs. New Zealand 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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