Correlation Between AfroCentric Investment and British Amer
Can any of the company-specific risk be diversified away by investing in both AfroCentric Investment and British Amer 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 British Amer 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 British American Tobacco, you can compare the effects of market volatilities on AfroCentric Investment and British Amer 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 British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfroCentric Investment and British Amer.
Diversification Opportunities for AfroCentric Investment and British Amer
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AfroCentric and British is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding AfroCentric Investment Corp and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of AfroCentric Investment i.e., AfroCentric Investment and British Amer go up and down completely randomly.
Pair Corralation between AfroCentric Investment and British Amer
Assuming the 90 days trading horizon AfroCentric Investment Corp is expected to under-perform the British Amer. In addition to that, AfroCentric Investment is 3.86 times more volatile than British American Tobacco. It trades about -0.03 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.12 per unit of volatility. If you would invest 5,037,727 in British American Tobacco on December 2, 2024 and sell it today you would earn a total of 2,151,873 from holding British American Tobacco or generate 42.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AfroCentric Investment Corp vs. British American Tobacco
Performance |
| Timeline |
| AfroCentric Investment |
| British American Tobacco |
AfroCentric Investment and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfroCentric Investment and British Amer
The main advantage of trading using opposite AfroCentric Investment and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfroCentric Investment position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.| AfroCentric Investment vs. Harmony Gold Mining | ||
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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