Correlation Between Afine Investments and Europa Metals
Can any of the company-specific risk be diversified away by investing in both Afine Investments and Europa Metals 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 Afine Investments and Europa Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afine Investments and Europa Metals, you can compare the effects of market volatilities on Afine Investments and Europa Metals 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 Afine Investments with a short position of Europa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afine Investments and Europa Metals.
Diversification Opportunities for Afine Investments and Europa Metals
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Afine and Europa is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Afine Investments and Europa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europa Metals and Afine Investments 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 Afine Investments are associated (or correlated) with Europa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europa Metals has no effect on the direction of Afine Investments i.e., Afine Investments and Europa Metals go up and down completely randomly.
Pair Corralation between Afine Investments and Europa Metals
Assuming the 90 days trading horizon Afine Investments is expected to generate 10.71 times more return on investment than Europa Metals. However, Afine Investments is 10.71 times more volatile than Europa Metals. It trades about 0.14 of its potential returns per unit of risk. Europa Metals is currently generating about 0.03 per unit of risk. If you would invest 38,217 in Afine Investments on September 5, 2024 and sell it today you would earn a total of 7,783 from holding Afine Investments or generate 20.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afine Investments vs. Europa Metals
Performance |
| Timeline |
| Afine Investments |
| Europa Metals |
Afine Investments and Europa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afine Investments and Europa Metals
The main advantage of trading using opposite Afine Investments and Europa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afine Investments position performs unexpectedly, Europa Metals 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 Europa Metals will offset losses from the drop in Europa Metals' long position.| Afine Investments vs. Sasol Ltd Bee | Afine Investments vs. Centaur Bci Balanced | Afine Investments vs. Sabvest Capital | Afine Investments vs. Growthpoint Properties |
| Europa Metals vs. Anglo American PLC | Europa Metals vs. African Rainbow Minerals | Europa Metals vs. Jubilee Platinum |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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