Correlation Between AFC Energy and Tecogen
Can any of the company-specific risk be diversified away by investing in both AFC Energy and Tecogen 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 Tecogen 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 Tecogen, you can compare the effects of market volatilities on AFC Energy and Tecogen 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 Tecogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and Tecogen.
Diversification Opportunities for AFC Energy and Tecogen
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AFC and Tecogen is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Tecogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecogen 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 Tecogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecogen has no effect on the direction of AFC Energy i.e., AFC Energy and Tecogen go up and down completely randomly.
Pair Corralation between AFC Energy and Tecogen
Assuming the 90 days horizon AFC Energy plc is expected to under-perform the Tecogen. But the pink sheet apears to be less risky and, when comparing its historical volatility, AFC Energy plc is 1.07 times less risky than Tecogen. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Tecogen is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 143.00 in Tecogen on August 24, 2024 and sell it today you would lose (36.00) from holding Tecogen or give up 25.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 32.12% |
| Values | Daily Returns |
AFC Energy plc vs. Tecogen
Performance |
| Timeline |
| AFC Energy plc |
| Tecogen |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AFC Energy and Tecogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFC Energy and Tecogen
The main advantage of trading using opposite AFC Energy and Tecogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, Tecogen 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 Tecogen will offset losses from the drop in Tecogen'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 |
| Tecogen vs. Legrand SA ADR | Tecogen vs. AFC Energy plc | Tecogen vs. Loop Energy | Tecogen vs. Sunrise New Energy |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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