Correlation Between African Discovery and FlexShopper
Can any of the company-specific risk be diversified away by investing in both African Discovery and FlexShopper 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 African Discovery and FlexShopper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Discovery Group and FlexShopper, you can compare the effects of market volatilities on African Discovery and FlexShopper 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 African Discovery with a short position of FlexShopper. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Discovery and FlexShopper.
Diversification Opportunities for African Discovery and FlexShopper
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between African and FlexShopper is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding African Discovery Group and FlexShopper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShopper and African Discovery 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 African Discovery Group are associated (or correlated) with FlexShopper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShopper has no effect on the direction of African Discovery i.e., African Discovery and FlexShopper go up and down completely randomly.
Pair Corralation between African Discovery and FlexShopper
Given the investment horizon of 90 days African Discovery Group is expected to generate 3.45 times more return on investment than FlexShopper. However, African Discovery is 3.45 times more volatile than FlexShopper. It trades about 0.05 of its potential returns per unit of risk. FlexShopper is currently generating about 0.04 per unit of risk. If you would invest 4.60 in African Discovery Group on November 2, 2024 and sell it today you would lose (3.70) from holding African Discovery Group or give up 80.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
African Discovery Group vs. FlexShopper
Performance |
| Timeline |
| African Discovery |
| FlexShopper |
African Discovery and FlexShopper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Discovery and FlexShopper
The main advantage of trading using opposite African Discovery and FlexShopper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Discovery position performs unexpectedly, FlexShopper 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 FlexShopper will offset losses from the drop in FlexShopper's long position.| African Discovery vs. Black Diamond Group | African Discovery vs. Alta Equipment Group | African Discovery vs. Ashtead Group plc | African Discovery vs. BOC Aviation Limited |
| FlexShopper vs. AZN Capital Corp | FlexShopper vs. Fortress Transportation and | FlexShopper vs. Ashtead Gro | FlexShopper vs. Alta Equipment Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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