Correlation Between AFROMEDIA PLC and STACO INSURANCE

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Can any of the company-specific risk be diversified away by investing in both AFROMEDIA PLC and STACO INSURANCE 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 AFROMEDIA PLC and STACO INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFROMEDIA PLC and STACO INSURANCE PLC, you can compare the effects of market volatilities on AFROMEDIA PLC and STACO INSURANCE 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 AFROMEDIA PLC with a short position of STACO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFROMEDIA PLC and STACO INSURANCE.

Diversification Opportunities for AFROMEDIA PLC and STACO INSURANCE

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between AFROMEDIA and STACO is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding AFROMEDIA PLC and STACO INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STACO INSURANCE PLC and AFROMEDIA PLC 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 AFROMEDIA PLC are associated (or correlated) with STACO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STACO INSURANCE PLC has no effect on the direction of AFROMEDIA PLC i.e., AFROMEDIA PLC and STACO INSURANCE go up and down completely randomly.

Pair Corralation between AFROMEDIA PLC and STACO INSURANCE

If you would invest  20.00  in AFROMEDIA PLC on November 5, 2024 and sell it today you would earn a total of  4.00  from holding AFROMEDIA PLC or generate 20.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy87.65%
ValuesDaily Returns

AFROMEDIA PLC  vs.  STACO INSURANCE PLC

 Performance 
       Timeline  
AFROMEDIA PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AFROMEDIA PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, AFROMEDIA PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
STACO INSURANCE PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STACO INSURANCE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, STACO INSURANCE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

AFROMEDIA PLC and STACO INSURANCE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AFROMEDIA PLC and STACO INSURANCE

The main advantage of trading using opposite AFROMEDIA PLC and STACO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFROMEDIA PLC position performs unexpectedly, STACO INSURANCE 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 STACO INSURANCE will offset losses from the drop in STACO INSURANCE's long position.
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The idea behind AFROMEDIA PLC and STACO INSURANCE PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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