Correlation Between Sekerbank TAS and Africa Oil

Can any of the company-specific risk be diversified away by investing in both Sekerbank TAS 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 Sekerbank TAS and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sekerbank TAS and Africa Oil Corp, you can compare the effects of market volatilities on Sekerbank TAS 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 Sekerbank TAS with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekerbank TAS and Africa Oil.

Diversification Opportunities for Sekerbank TAS and Africa Oil

-0.05

Correlation Coefficient

Sekerbank TAS  Africa Oil

Good diversification

The 3 months correlation between Sekerbank and Africa is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sekerbank TAS 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 Sekerbank TAS 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 Sekerbank TAS 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 Sekerbank TAS i.e., Sekerbank TAS and Africa Oil go up and down completely randomly.

Pair Corralation between Sekerbank TAS and Africa Oil

Assuming the 90 days trading horizon Sekerbank TAS is expected to generate 1.1 times less return on investment than Africa Oil. In addition to that, Sekerbank TAS is 1.03 times more volatile than Africa Oil Corp. It trades about 0.08 of its total potential returns per unit of risk. Africa Oil Corp is currently generating about 0.09 per unit of volatility. If you would invest  224.00  in Africa Oil Corp on February 22, 2024 and sell it today you would earn a total of  26.00  from holding Africa Oil Corp or generate 11.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Sekerbank TAS  vs.  Africa Oil Corp

Sekerbank TAS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sekerbank TAS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward-looking signals, Sekerbank TAS may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Africa Oil Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Africa Oil Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Africa Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sekerbank TAS and Africa Oil

The main advantage of trading using opposite Sekerbank TAS and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekerbank TAS 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.

The idea behind Sekerbank TAS and Africa Oil Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.