Correlation Between Astar and AFC Gamma
Can any of the company-specific risk be diversified away by investing in both Astar and AFC Gamma 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 Astar and AFC Gamma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and AFC Gamma, you can compare the effects of market volatilities on Astar and AFC Gamma 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 Astar with a short position of AFC Gamma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and AFC Gamma.
Diversification Opportunities for Astar and AFC Gamma
Poor diversification
The 3 months correlation between Astar and AFC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Astar and AFC Gamma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Gamma and Astar 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 Astar are associated (or correlated) with AFC Gamma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Gamma has no effect on the direction of Astar i.e., Astar and AFC Gamma go up and down completely randomly.
Pair Corralation between Astar and AFC Gamma
Assuming the 90 days trading horizon Astar is expected to generate 4.2 times more return on investment than AFC Gamma. However, Astar is 4.2 times more volatile than AFC Gamma. It trades about 0.01 of its potential returns per unit of risk. AFC Gamma is currently generating about 0.02 per unit of risk. If you would invest 7.90 in Astar on November 2, 2024 and sell it today you would lose (2.93) from holding Astar or give up 37.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 60.32% |
| Values | Daily Returns |
Astar vs. AFC Gamma
Performance |
| Timeline |
| Astar |
| AFC Gamma |
Astar and AFC Gamma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and AFC Gamma
The main advantage of trading using opposite Astar and AFC Gamma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, AFC Gamma 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 AFC Gamma will offset losses from the drop in AFC Gamma's long position.The idea behind Astar and AFC Gamma 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.| AFC Gamma vs. Newlake Capital Partners | AFC Gamma vs. SBA Communications Corp | AFC Gamma vs. Gladstone Land | AFC Gamma vs. Lamar Advertising |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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