Correlation Between Saturn Oil and Africa Energy

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

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

Diversification Opportunities for Saturn Oil and Africa Energy

-0.42

Correlation Coefficient

Saturn Oil  Africa Energy

Very good diversification

The 3 months correlation between Saturn and Africa is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Saturn Oil Gas and Africa Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Energy Corp and Saturn 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 Saturn Oil Gas are associated (or correlated) with Africa Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Energy Corp has no effect on the direction of Saturn Oil i.e., Saturn Oil and Africa Energy go up and down completely randomly.

Pair Corralation between Saturn Oil and Africa Energy

Assuming the 90 days horizon Saturn Oil Gas is expected to under-perform the Africa Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Saturn Oil Gas is 2.65 times less risky than Africa Energy. The otc stock trades about -0.1 of its potential returns per unit of risk. The Africa Energy Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Africa Energy Corp on December 1, 2024 and sell it today you would earn a total of  1.20  from holding Africa Energy Corp or generate 66.67% return on investment over 90 days.

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

Saturn Oil Gas  vs.  Africa Energy Corp

Saturn Oil Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saturn Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Africa Energy Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Africa Energy Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Africa Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saturn Oil and Africa Energy

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

The idea behind Saturn Oil Gas and Africa Energy 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.