Correlation Between AfroCentric Investment and Aveng
Can any of the company-specific risk be diversified away by investing in both AfroCentric Investment and Aveng 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 AfroCentric Investment and Aveng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfroCentric Investment Corp and Aveng, you can compare the effects of market volatilities on AfroCentric Investment and Aveng 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 AfroCentric Investment with a short position of Aveng. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfroCentric Investment and Aveng.
Diversification Opportunities for AfroCentric Investment and Aveng
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AfroCentric and Aveng is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding AfroCentric Investment Corp and Aveng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveng and AfroCentric Investment 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 AfroCentric Investment Corp are associated (or correlated) with Aveng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveng has no effect on the direction of AfroCentric Investment i.e., AfroCentric Investment and Aveng go up and down completely randomly.
Pair Corralation between AfroCentric Investment and Aveng
Assuming the 90 days trading horizon AfroCentric Investment Corp is expected to under-perform the Aveng. In addition to that, AfroCentric Investment is 4.04 times more volatile than Aveng. It trades about -0.13 of its total potential returns per unit of risk. Aveng is currently generating about 0.19 per unit of volatility. If you would invest 115,800 in Aveng on October 21, 2024 and sell it today you would earn a total of 6,700 from holding Aveng or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
AfroCentric Investment Corp vs. Aveng
Performance |
| Timeline |
| AfroCentric Investment |
| Aveng |
AfroCentric Investment and Aveng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfroCentric Investment and Aveng
The main advantage of trading using opposite AfroCentric Investment and Aveng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfroCentric Investment position performs unexpectedly, Aveng 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 Aveng will offset losses from the drop in Aveng's long position.The idea behind AfroCentric Investment Corp and Aveng 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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