Correlation Between Hayward Holdings and AFC Energy
Can any of the company-specific risk be diversified away by investing in both Hayward Holdings 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 Hayward Holdings and AFC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hayward Holdings and AFC Energy plc, you can compare the effects of market volatilities on Hayward Holdings 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 Hayward Holdings with a short position of AFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hayward Holdings and AFC Energy.
Diversification Opportunities for Hayward Holdings and AFC Energy
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hayward and AFC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hayward Holdings 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 Hayward Holdings 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 Hayward Holdings 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 Hayward Holdings i.e., Hayward Holdings and AFC Energy go up and down completely randomly.
Pair Corralation between Hayward Holdings and AFC Energy
Given the investment horizon of 90 days Hayward Holdings is expected to generate 2.27 times less return on investment than AFC Energy. But when comparing it to its historical volatility, Hayward Holdings is 3.59 times less risky than AFC Energy. It trades about 0.14 of its potential returns per unit of risk. AFC Energy plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11.00 in AFC Energy plc on August 25, 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 | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hayward Holdings vs. AFC Energy plc
Performance |
| Timeline |
| Hayward Holdings |
| AFC Energy plc |
Hayward Holdings and AFC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hayward Holdings and AFC Energy
The main advantage of trading using opposite Hayward Holdings and AFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hayward Holdings 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.| Hayward Holdings vs. Kimball Electronics | Hayward Holdings vs. Enersys | Hayward Holdings vs. Espey Mfg Electronics | Hayward Holdings vs. Energizer Holdings |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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