Correlation Between Rubicon Organics and Africa Oil

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

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

Diversification Opportunities for Rubicon Organics and Africa Oil

-0.29

Correlation Coefficient

Rubicon Organics  Africa Oil

Very good diversification

The 3 months correlation between Rubicon and Africa is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics 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 Rubicon Organics 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 Rubicon Organics 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 Rubicon Organics i.e., Rubicon Organics and Africa Oil go up and down completely randomly.

Pair Corralation between Rubicon Organics and Africa Oil

Assuming the 90 days trading horizon Rubicon Organics is expected to under-perform the Africa Oil. In addition to that, Rubicon Organics is 1.86 times more volatile than Africa Oil Corp. It trades about -0.1 of its total potential returns per unit of risk. Africa Oil Corp is currently generating about 0.04 per unit of volatility. If you would invest  188.00  in Africa Oil Corp on September 2, 2024 and sell it today you would earn a total of  9.00  from holding Africa Oil Corp or generate 4.79% return on investment over 90 days.

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

Rubicon Organics  vs.  Africa Oil Corp

Rubicon Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubicon Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Africa Oil Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Africa Oil Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Africa Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rubicon Organics and Africa Oil

The main advantage of trading using opposite Rubicon Organics and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rubicon Organics 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 Rubicon Organics 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.