Correlation Between ValOre Metals and Africa Energy

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

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

Diversification Opportunities for ValOre Metals and Africa Energy

-0.57

Correlation Coefficient

ValOre Metals  Africa Energy

Excellent diversification

The 3 months correlation between ValOre and Africa is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ValOre Metals Corp 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 ValOre Metals 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 ValOre Metals Corp 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 ValOre Metals i.e., ValOre Metals and Africa Energy go up and down completely randomly.

Pair Corralation between ValOre Metals and Africa Energy

Given the investment horizon of 90 days ValOre Metals Corp is expected to generate 1.23 times more return on investment than Africa Energy. However, ValOre Metals is 1.23 times more volatile than Africa Energy Corp. It trades about 0.09 of its potential returns per unit of risk. Africa Energy Corp is currently generating about 0.01 per unit of risk. If you would invest  6.00  in ValOre Metals Corp on August 31, 2024 and sell it today you would earn a total of  2.00  from holding ValOre Metals Corp or generate 33.33% return on investment over 90 days.

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

ValOre Metals Corp  vs.  Africa Energy Corp

ValOre Metals Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ValOre Metals Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ValOre Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Africa Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Africa Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Africa Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ValOre Metals and Africa Energy

The main advantage of trading using opposite ValOre Metals and Africa Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ValOre Metals 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 ValOre Metals Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.