Correlation Between AFC Energy and Plug Power
Can any of the company-specific risk be diversified away by investing in both AFC Energy and Plug Power 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 Plug Power 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 Plug Power, you can compare the effects of market volatilities on AFC Energy and Plug Power 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 Plug Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and Plug Power.
Diversification Opportunities for AFC Energy and Plug Power
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between AFC and Plug is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power 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 Plug Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plug Power has no effect on the direction of AFC Energy i.e., AFC Energy and Plug Power go up and down completely randomly.
Pair Corralation between AFC Energy and Plug Power
Assuming the 90 days horizon AFC Energy plc is expected to generate 0.92 times more return on investment than Plug Power. However, AFC Energy plc is 1.09 times less risky than Plug Power. It trades about 0.14 of its potential returns per unit of risk. Plug Power is currently generating about -0.01 per unit of risk. If you would invest 11.00 in AFC Energy plc on August 28, 2024 and sell it today you would earn a total of 2.00 from holding AFC Energy plc or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AFC Energy plc vs. Plug Power
Performance |
| Timeline |
| AFC Energy plc |
| Plug Power |
AFC Energy and Plug Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFC Energy and Plug Power
The main advantage of trading using opposite AFC Energy and Plug Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, Plug Power 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 Plug Power will offset losses from the drop in Plug Power'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 |
| Plug Power vs. Bloom Energy Corp | Plug Power vs. Microvast Holdings | Plug Power vs. Solid Power | Plug Power 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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