Correlation Between Xtract One and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Xtract One 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 Xtract One and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtract One Technologies and Africa Oil Corp, you can compare the effects of market volatilities on Xtract One 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 Xtract One with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtract One and Africa Oil.
Diversification Opportunities for Xtract One and Africa Oil
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xtract and Africa is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Xtract One Technologies 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 Xtract One 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 Xtract One Technologies 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 Xtract One i.e., Xtract One and Africa Oil go up and down completely randomly.
Pair Corralation between Xtract One and Africa Oil
Assuming the 90 days trading horizon Xtract One Technologies is expected to generate 1.49 times more return on investment than Africa Oil. However, Xtract One is 1.49 times more volatile than Africa Oil Corp. It trades about -0.01 of its potential returns per unit of risk. Africa Oil Corp is currently generating about -0.02 per unit of risk. If you would invest 84.00 in Xtract One Technologies on September 2, 2024 and sell it today you would lose (18.00) from holding Xtract One Technologies or give up 21.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtract One Technologies vs. Africa Oil Corp
Performance |
| Timeline |
| Xtract One Technologies |
| Africa Oil Corp |
Xtract One and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtract One and Africa Oil
The main advantage of trading using opposite Xtract One and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtract One 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.| Xtract One vs. Millennium Silver Corp | Xtract One vs. Costco Wholesale Corp | Xtract One vs. Faction Investment Group | Xtract One vs. Perseus 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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