Correlation Between Molten Ventures and Africa Opportunity

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

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

Diversification Opportunities for Molten Ventures and Africa Opportunity

-0.85

Correlation Coefficient

Molten Ventures  Africa Opportunity

Pay attention - limited upside

The 3 months correlation between Molten and Africa is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Molten Ventures VCT and Africa Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Opportunity and Molten Ventures 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 Molten Ventures VCT are associated (or correlated) with Africa Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Opportunity has no effect on the direction of Molten Ventures i.e., Molten Ventures and Africa Opportunity go up and down completely randomly.

Pair Corralation between Molten Ventures and Africa Opportunity

Assuming the 90 days trading horizon Molten Ventures VCT is expected to under-perform the Africa Opportunity. But the fund apears to be less risky and, when comparing its historical volatility, Molten Ventures VCT is 1.82 times less risky than Africa Opportunity. The fund trades about -0.05 of its potential returns per unit of risk. The Africa Opportunity is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  60.00  in Africa Opportunity on September 30, 2024 and sell it today you would earn a total of  3.00  from holding Africa Opportunity or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Molten Ventures VCT  vs.  Africa Opportunity

Molten Ventures VCT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molten Ventures VCT has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unsteady performance, the Fund's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the fund private investors.

Africa Opportunity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Africa Opportunity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Africa Opportunity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Molten Ventures and Africa Opportunity

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

The idea behind Molten Ventures VCT and Africa Opportunity 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.