Correlation Between Nitro Games and Africa Oil

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

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

Diversification Opportunities for Nitro Games and Africa Oil

0.45

Correlation Coefficient

Nitro Games  Africa Oil

Very weak diversification

The 3 months correlation between Nitro and Africa is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nitro Games Oyj 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 Nitro Games 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 Nitro Games Oyj 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 Nitro Games i.e., Nitro Games and Africa Oil go up and down completely randomly.

Pair Corralation between Nitro Games and Africa Oil

Assuming the 90 days trading horizon Nitro Games Oyj is expected to generate 1.56 times more return on investment than Africa Oil. However, Nitro Games is 1.56 times more volatile than Africa Oil Corp. It trades about 0.17 of its potential returns per unit of risk. Africa Oil Corp is currently generating about 0.17 per unit of risk. If you would invest  238.00  in Nitro Games Oyj on September 3, 2024 and sell it today you would earn a total of  28.00  from holding Nitro Games Oyj or generate 11.76% return on investment over 90 days.

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

Nitro Games Oyj  vs.  Africa Oil Corp

Nitro Games Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nitro Games Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nitro Games is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Africa Oil Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Africa Oil Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Africa Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nitro Games and Africa Oil

The main advantage of trading using opposite Nitro Games and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nitro Games 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 Nitro Games Oyj 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.