Correlation Between Afyren SAS and Entech SE
Can any of the company-specific risk be diversified away by investing in both Afyren SAS and Entech SE 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 Afyren SAS and Entech SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afyren SAS and Entech SE SAS, you can compare the effects of market volatilities on Afyren SAS and Entech SE 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 Afyren SAS with a short position of Entech SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afyren SAS and Entech SE.
Diversification Opportunities for Afyren SAS and Entech SE
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Afyren and Entech is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Afyren SAS and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS and Afyren SAS 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 Afyren SAS are associated (or correlated) with Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of Afyren SAS i.e., Afyren SAS and Entech SE go up and down completely randomly.
Pair Corralation between Afyren SAS and Entech SE
Assuming the 90 days trading horizon Afyren SAS is expected to generate 1.23 times more return on investment than Entech SE. However, Afyren SAS is 1.23 times more volatile than Entech SE SAS. It trades about 0.01 of its potential returns per unit of risk. Entech SE SAS is currently generating about -0.02 per unit of risk. If you would invest 195.00 in Afyren SAS on November 3, 2024 and sell it today you would lose (29.00) from holding Afyren SAS or give up 14.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afyren SAS vs. Entech SE SAS
Performance |
| Timeline |
| Afyren SAS |
| Entech SE SAS |
Afyren SAS and Entech SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afyren SAS and Entech SE
The main advantage of trading using opposite Afyren SAS and Entech SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afyren SAS position performs unexpectedly, Entech SE 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 Entech SE will offset losses from the drop in Entech SE's long position.The idea behind Afyren SAS and Entech SE SAS 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.| Entech SE vs. Afyren SAS | Entech SE vs. Voltalia SA | Entech SE vs. Waga Energy SA | Entech SE vs. Haffner Energy SA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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