Correlation Between ESS Tech and AFC Energy
Can any of the company-specific risk be diversified away by investing in both ESS Tech and AFC Energy 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 ESS Tech and AFC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESS Tech and AFC Energy plc, you can compare the effects of market volatilities on ESS Tech and AFC Energy 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 ESS Tech with a short position of AFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESS Tech and AFC Energy.
Diversification Opportunities for ESS Tech and AFC Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESS and AFC is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ESS Tech and AFC Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Energy plc and ESS Tech 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 ESS Tech are associated (or correlated) with AFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Energy plc has no effect on the direction of ESS Tech i.e., ESS Tech and AFC Energy go up and down completely randomly.
Pair Corralation between ESS Tech and AFC Energy
Considering the 90-day investment horizon ESS Tech is expected to under-perform the AFC Energy. In addition to that, ESS Tech is 1.39 times more volatile than AFC Energy plc. It trades about -0.09 of its total potential returns per unit of risk. AFC Energy plc is currently generating about 0.09 per unit of volatility. If you would invest 11.00 in AFC Energy plc on August 27, 2024 and sell it today you would earn a total of 1.00 from holding AFC Energy plc or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESS Tech vs. AFC Energy plc
Performance |
| Timeline |
| ESS Tech |
| AFC Energy plc |
ESS Tech and AFC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESS Tech and AFC Energy
The main advantage of trading using opposite ESS Tech and AFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESS Tech position performs unexpectedly, AFC Energy 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 Energy will offset losses from the drop in AFC Energy's long position.| ESS Tech vs. Fluence Energy | ESS Tech vs. Solid Power | ESS Tech vs. Eos Energy Enterprises | ESS Tech vs. FREYR Battery SA |
| AFC Energy vs. FREYR Battery SA | AFC Energy vs. nVent Electric PLC | AFC Energy vs. Hubbell | AFC Energy vs. Advanced Energy Industries |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |