Correlation Between AfroCentric Investment and Libstar Holdings
Can any of the company-specific risk be diversified away by investing in both AfroCentric Investment and Libstar Holdings 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 Libstar Holdings 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 Libstar Holdings, you can compare the effects of market volatilities on AfroCentric Investment and Libstar Holdings 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 Libstar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfroCentric Investment and Libstar Holdings.
Diversification Opportunities for AfroCentric Investment and Libstar Holdings
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AfroCentric and Libstar is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AfroCentric Investment Corp and Libstar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libstar Holdings 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 Libstar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libstar Holdings has no effect on the direction of AfroCentric Investment i.e., AfroCentric Investment and Libstar Holdings go up and down completely randomly.
Pair Corralation between AfroCentric Investment and Libstar Holdings
Assuming the 90 days trading horizon AfroCentric Investment Corp is expected to generate 1.04 times more return on investment than Libstar Holdings. However, AfroCentric Investment is 1.04 times more volatile than Libstar Holdings. It trades about 0.08 of its potential returns per unit of risk. Libstar Holdings is currently generating about -0.14 per unit of risk. If you would invest 15,900 in AfroCentric Investment Corp on January 4, 2025 and sell it today you would earn a total of 1,100 from holding AfroCentric Investment Corp or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AfroCentric Investment Corp vs. Libstar Holdings
Performance |
| Timeline |
| AfroCentric Investment |
| Libstar Holdings |
AfroCentric Investment and Libstar Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfroCentric Investment and Libstar Holdings
The main advantage of trading using opposite AfroCentric Investment and Libstar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfroCentric Investment position performs unexpectedly, Libstar Holdings 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 Libstar Holdings will offset losses from the drop in Libstar Holdings' long position.| AfroCentric Investment vs. Astral Foods | AfroCentric Investment vs. Deneb Investments | AfroCentric Investment vs. Frontier Transport Holdings | AfroCentric Investment vs. Zeder Investments |
| Libstar Holdings vs. Tiger Brands | Libstar Holdings vs. Avi | Libstar Holdings vs. RCL Foods | Libstar Holdings vs. Oceana |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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