Correlation Between Africa Oil and Athabasca Oil

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

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

Diversification Opportunities for Africa Oil and Athabasca Oil

-0.12

Correlation Coefficient

Africa Oil  Athabasca Oil

Good diversification

The 3 months correlation between Africa and Athabasca is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Athabasca Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athabasca Oil Corp and Africa 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 Africa Oil Corp are associated (or correlated) with Athabasca Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athabasca Oil Corp has no effect on the direction of Africa Oil i.e., Africa Oil and Athabasca Oil go up and down completely randomly.

Pair Corralation between Africa Oil and Athabasca Oil

Assuming the 90 days horizon Africa Oil is expected to generate 7.84 times less return on investment than Athabasca Oil. But when comparing it to its historical volatility, Africa Oil Corp is 1.49 times less risky than Athabasca Oil. It trades about 0.03 of its potential returns per unit of risk. Athabasca Oil Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  326.00  in Athabasca Oil Corp on May 7, 2025 and sell it today you would earn a total of  84.00  from holding Athabasca Oil Corp or generate 25.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Africa Oil Corp  vs.  Athabasca Oil Corp

Africa Oil Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Africa Oil Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Africa Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Athabasca Oil Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Athabasca Oil Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Athabasca Oil reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Africa Oil and Athabasca Oil

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

The idea behind Africa Oil Corp and Athabasca 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..