Correlation Between AFC Energy and ADS TEC
Can any of the company-specific risk be diversified away by investing in both AFC Energy and ADS TEC 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 AFC Energy and ADS TEC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFC Energy plc and ADS TEC ENERGY PLC, you can compare the effects of market volatilities on AFC Energy and ADS TEC 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 AFC Energy with a short position of ADS TEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and ADS TEC.
Diversification Opportunities for AFC Energy and ADS TEC
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AFC and ADS is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and ADS TEC ENERGY PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADS TEC ENERGY and AFC Energy 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 AFC Energy plc are associated (or correlated) with ADS TEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADS TEC ENERGY has no effect on the direction of AFC Energy i.e., AFC Energy and ADS TEC go up and down completely randomly.
Pair Corralation between AFC Energy and ADS TEC
Assuming the 90 days horizon AFC Energy plc is expected to under-perform the ADS TEC. But the pink sheet apears to be less risky and, when comparing its historical volatility, AFC Energy plc is 25.86 times less risky than ADS TEC. The pink sheet trades about -0.04 of its potential returns per unit of risk. The ADS TEC ENERGY PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 245.00 in ADS TEC ENERGY PLC on September 3, 2024 and sell it today you would earn a total of 97.00 from holding ADS TEC ENERGY PLC or generate 39.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.78% |
| Values | Daily Returns |
AFC Energy plc vs. ADS TEC ENERGY PLC
Performance |
| Timeline |
| AFC Energy plc |
| ADS TEC ENERGY |
AFC Energy and ADS TEC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFC Energy and ADS TEC
The main advantage of trading using opposite AFC Energy and ADS TEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, ADS TEC 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 ADS TEC will offset losses from the drop in ADS TEC's long position.| AFC Energy vs. Legrand SA ADR | AFC Energy vs. Loop Energy | AFC Energy vs. Sunrise New Energy | AFC Energy vs. Alfen NV |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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