Correlation Between Maha Energy and Africa Oil

Can any of the company-specific risk be diversified away by investing in both Maha 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 Maha 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 Maha Energy AB and Africa Oil Corp, you can compare the effects of market volatilities on Maha 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 Maha Energy with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maha Energy and Africa Oil.

Diversification Opportunities for Maha Energy and Africa Oil

0.71

Correlation Coefficient

Maha Energy  Africa Oil

Poor diversification

The 3 months correlation between Maha and Africa is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Maha Energy AB 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 Maha 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 Maha Energy AB 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 Maha Energy i.e., Maha Energy and Africa Oil go up and down completely randomly.

Pair Corralation between Maha Energy and Africa Oil

Assuming the 90 days trading horizon Maha Energy AB is expected to under-perform the Africa Oil. In addition to that, Maha Energy is 1.38 times more volatile than Africa Oil Corp. It trades about -0.14 of its total potential returns per unit of risk. Africa Oil Corp is currently generating about 0.01 per unit of volatility. If you would invest  1,441  in Africa Oil Corp on December 30, 2024 and sell it today you would lose (1.00) from holding Africa Oil Corp or give up 0.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Maha Energy AB  vs.  Africa Oil Corp

Maha Energy AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maha Energy AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 comparatively stable forward indicators, Africa Oil is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Maha Energy and Africa Oil

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

The idea behind Maha Energy AB 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 Commodity Directory module to find actively traded commodities issued by global exchanges.