Correlation Between Africa Oil and Fractal Gaming

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

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

Diversification Opportunities for Africa Oil and Fractal Gaming

-0.05

Correlation Coefficient

Africa Oil  Fractal Gaming

Good diversification

The 3 months correlation between Africa and Fractal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Fractal Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fractal Gaming Group and Africa Oil 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 Africa Oil Corp are associated (or correlated) with Fractal Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fractal Gaming Group has no effect on the direction of Africa Oil i.e., Africa Oil and Fractal Gaming go up and down completely randomly.

Pair Corralation between Africa Oil and Fractal Gaming

Assuming the 90 days trading horizon Africa Oil Corp is expected to under-perform the Fractal Gaming. But the stock apears to be less risky and, when comparing its historical volatility, Africa Oil Corp is 1.3 times less risky than Fractal Gaming. The stock trades about -0.07 of its potential returns per unit of risk. The Fractal Gaming Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,170  in Fractal Gaming Group on November 29, 2024 and sell it today you would earn a total of  540.00  from holding Fractal Gaming Group or generate 17.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Africa Oil Corp  vs.  Fractal Gaming Group

Africa Oil Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Africa Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fractal Gaming Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fractal Gaming Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fractal Gaming sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Africa Oil and Fractal Gaming

The main advantage of trading using opposite Africa Oil and Fractal Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Fractal Gaming 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 Fractal Gaming will offset losses from the drop in Fractal Gaming's long position.

The idea behind Africa Oil Corp and Fractal Gaming Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.