Correlation Between AFC Energy and Eos Energy
Can any of the company-specific risk be diversified away by investing in both AFC Energy and Eos Energy 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 Eos Energy 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 Eos Energy Enterprises, you can compare the effects of market volatilities on AFC Energy and Eos Energy 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 Eos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and Eos Energy.
Diversification Opportunities for AFC Energy and Eos Energy
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AFC and Eos is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Eos Energy Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eos Energy Enterprises 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 Eos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eos Energy Enterprises has no effect on the direction of AFC Energy i.e., AFC Energy and Eos Energy go up and down completely randomly.
Pair Corralation between AFC Energy and Eos Energy
Assuming the 90 days horizon AFC Energy plc is expected to generate 1.04 times more return on investment than Eos Energy. However, AFC Energy is 1.04 times more volatile than Eos Energy Enterprises. It trades about 0.09 of its potential returns per unit of risk. Eos Energy Enterprises is currently generating about -0.11 per unit of risk. If you would invest 11.00 in AFC Energy plc on August 27, 2024 and sell it today you would earn a total of 1.00 from holding AFC Energy plc or generate 9.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AFC Energy plc vs. Eos Energy Enterprises
Performance |
Timeline |
AFC Energy plc |
Eos Energy Enterprises |
AFC Energy and Eos Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AFC Energy and Eos Energy
The main advantage of trading using opposite AFC Energy and Eos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, Eos Energy 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 Eos Energy will offset losses from the drop in Eos Energy's long position.AFC Energy vs. FREYR Battery SA | AFC Energy vs. nVent Electric PLC | AFC Energy vs. Hubbell | AFC Energy vs. Advanced Energy Industries |
Eos Energy vs. FREYR Battery SA | Eos Energy vs. Microvast Holdings | Eos Energy vs. Chardan NexTech Acquisition | Eos Energy vs. Solid Power |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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