Correlation Between Europa Metals and Afine Investments
Can any of the company-specific risk be diversified away by investing in both Europa Metals and Afine 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 Europa Metals and Afine Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europa Metals and Afine Investments, you can compare the effects of market volatilities on Europa Metals and Afine 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 Europa Metals with a short position of Afine Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europa Metals and Afine Investments.
Diversification Opportunities for Europa Metals and Afine Investments
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Europa and Afine is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals and Afine Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afine Investments and Europa Metals 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 Europa Metals are associated (or correlated) with Afine Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afine Investments has no effect on the direction of Europa Metals i.e., Europa Metals and Afine Investments go up and down completely randomly.
Pair Corralation between Europa Metals and Afine Investments
Assuming the 90 days trading horizon Europa Metals is expected to generate 47.18 times less return on investment than Afine Investments. But when comparing it to its historical volatility, Europa Metals is 10.71 times less risky than Afine Investments. It trades about 0.03 of its potential returns per unit of risk. Afine Investments is currently generating about 0.14 of returns per unit of risk over similar time horizon. 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 |
Europa Metals vs. Afine Investments
Performance |
| Timeline |
| Europa Metals |
| Afine Investments |
Europa Metals and Afine Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europa Metals and Afine Investments
The main advantage of trading using opposite Europa Metals and Afine Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europa Metals position performs unexpectedly, Afine 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 Afine Investments will offset losses from the drop in Afine Investments' long position.| Europa Metals vs. Anglo American PLC | Europa Metals vs. African Rainbow Minerals | Europa Metals vs. Jubilee Platinum |
| Afine Investments vs. Sasol Ltd Bee | Afine Investments vs. Centaur Bci Balanced | Afine Investments vs. Sabvest Capital | Afine Investments vs. Growthpoint Properties |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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