Correlation Between Afrimat and Deneb Investments
Can any of the company-specific risk be diversified away by investing in both Afrimat and Deneb Investments 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 Afrimat and Deneb Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afrimat and Deneb Investments, you can compare the effects of market volatilities on Afrimat and Deneb Investments 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 Afrimat with a short position of Deneb Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afrimat and Deneb Investments.
Diversification Opportunities for Afrimat and Deneb Investments
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Afrimat and Deneb is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Afrimat and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb Investments and Afrimat 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 Afrimat are associated (or correlated) with Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of Afrimat i.e., Afrimat and Deneb Investments go up and down completely randomly.
Pair Corralation between Afrimat and Deneb Investments
Assuming the 90 days trading horizon Afrimat is expected to generate 5.16 times more return on investment than Deneb Investments. However, Afrimat is 5.16 times more volatile than Deneb Investments. It trades about 0.04 of its potential returns per unit of risk. Deneb Investments is currently generating about 0.02 per unit of risk. If you would invest 520,000 in Afrimat on September 4, 2024 and sell it today you would earn a total of 127,000 from holding Afrimat or generate 24.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Afrimat vs. Deneb Investments
Performance |
| Timeline |
| Afrimat |
| Deneb Investments |
Afrimat and Deneb Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afrimat and Deneb Investments
The main advantage of trading using opposite Afrimat and Deneb Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afrimat position performs unexpectedly, Deneb Investments 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 Deneb Investments will offset losses from the drop in Deneb Investments' long position.| Afrimat vs. Master Drilling Group | Afrimat vs. E Media Holdings | Afrimat vs. Safari Investments RSA | Afrimat vs. AfroCentric Investment Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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