Correlation Between SolTech Energy and Africa Oil
Can any of the company-specific risk be diversified away by investing in both SolTech Energy 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 SolTech Energy and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolTech Energy Sweden and Africa Oil Corp, you can compare the effects of market volatilities on SolTech Energy 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 SolTech Energy with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Africa Oil.
Diversification Opportunities for SolTech Energy and Africa Oil
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SolTech and Africa is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden 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 SolTech 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 SolTech Energy Sweden 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 SolTech Energy i.e., SolTech Energy and Africa Oil go up and down completely randomly.
Pair Corralation between SolTech Energy and Africa Oil
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Africa Oil. In addition to that, SolTech Energy is 1.82 times more volatile than Africa Oil Corp. It trades about -0.06 of its total potential returns per unit of risk. Africa Oil Corp is currently generating about 0.0 per unit of volatility. If you would invest 1,759 in Africa Oil Corp on August 28, 2024 and sell it today you would lose (204.00) from holding Africa Oil Corp or give up 11.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Africa Oil Corp
Performance |
| Timeline |
| SolTech Energy Sweden |
| Africa Oil Corp |
SolTech Energy and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Africa Oil
The main advantage of trading using opposite SolTech Energy and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy 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.| SolTech Energy vs. Eolus Vind AB | SolTech Energy vs. Sinch AB | SolTech Energy vs. Embracer Group AB | SolTech Energy vs. Powercell Sweden |
| Africa Oil vs. International Petroleum | Africa Oil vs. Africa Energy Corp | Africa Oil vs. Africa Oil Corp | Africa Oil vs. Lundin Mining |
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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