Correlation Between Deneb Investments and Afrimat
Can any of the company-specific risk be diversified away by investing in both Deneb Investments and Afrimat 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 Deneb Investments and Afrimat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deneb Investments and Afrimat, you can compare the effects of market volatilities on Deneb Investments and Afrimat 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 Deneb Investments with a short position of Afrimat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deneb Investments and Afrimat.
Diversification Opportunities for Deneb Investments and Afrimat
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deneb and Afrimat is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Deneb Investments and Afrimat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afrimat and Deneb 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 Deneb Investments are associated (or correlated) with Afrimat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afrimat has no effect on the direction of Deneb Investments i.e., Deneb Investments and Afrimat go up and down completely randomly.
Pair Corralation between Deneb Investments and Afrimat
Assuming the 90 days trading horizon Deneb Investments is expected to generate 8.46 times less return on investment than Afrimat. But when comparing it to its historical volatility, Deneb Investments is 5.16 times less risky than Afrimat. It trades about 0.02 of its potential returns per unit of risk. Afrimat is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 |
Deneb Investments vs. Afrimat
Performance |
| Timeline |
| Deneb Investments |
| Afrimat |
Deneb Investments and Afrimat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deneb Investments and Afrimat
The main advantage of trading using opposite Deneb Investments and Afrimat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deneb Investments position performs unexpectedly, Afrimat 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 Afrimat will offset losses from the drop in Afrimat's long position.The idea behind Deneb Investments and Afrimat 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.| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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