Correlation Between AFC Energy and Signify NV
Can any of the company-specific risk be diversified away by investing in both AFC Energy and Signify NV 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 Signify NV 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 Signify NV, you can compare the effects of market volatilities on AFC Energy and Signify NV 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 Signify NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and Signify NV.
Diversification Opportunities for AFC Energy and Signify NV
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between AFC and Signify is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify NV 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 Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of AFC Energy i.e., AFC Energy and Signify NV go up and down completely randomly.
Pair Corralation between AFC Energy and Signify NV
Assuming the 90 days horizon AFC Energy plc is expected to under-perform the Signify NV. In addition to that, AFC Energy is 2.5 times more volatile than Signify NV. It trades about -0.02 of its total potential returns per unit of risk. Signify NV is currently generating about -0.03 per unit of volatility. If you would invest 1,333 in Signify NV on November 5, 2024 and sell it today you would lose (245.00) from holding Signify NV or give up 18.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.99% |
| Values | Daily Returns |
AFC Energy plc vs. Signify NV
Performance |
| Timeline |
| AFC Energy plc |
| Signify NV |
AFC Energy and Signify NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFC Energy and Signify NV
The main advantage of trading using opposite AFC Energy and Signify NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, Signify NV 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 Signify NV will offset losses from the drop in Signify NV'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 |
| Signify NV vs. Tantalus Systems Holding | Signify NV vs. AFC Energy plc | Signify NV vs. Loop Energy | Signify NV vs. CBAK Energy Technology |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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