Correlation Between Signify NV and AFC Energy
Can any of the company-specific risk be diversified away by investing in both Signify NV 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 Signify NV and AFC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Signify NV and AFC Energy plc, you can compare the effects of market volatilities on Signify NV 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 Signify NV with a short position of AFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signify NV and AFC Energy.
Diversification Opportunities for Signify NV and AFC Energy
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Signify and AFC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Signify NV 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 Signify NV 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 Signify NV 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 Signify NV i.e., Signify NV and AFC Energy go up and down completely randomly.
Pair Corralation between Signify NV and AFC Energy
Assuming the 90 days horizon Signify NV is expected to generate 0.33 times more return on investment than AFC Energy. However, Signify NV is 3.0 times less risky than AFC Energy. It trades about 0.01 of its potential returns per unit of risk. AFC Energy plc is currently generating about -0.06 per unit of risk. If you would invest 1,150 in Signify NV on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Signify NV or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Signify NV vs. AFC Energy plc
Performance |
| Timeline |
| Signify NV |
| AFC Energy plc |
Signify NV and AFC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Signify NV and AFC Energy
The main advantage of trading using opposite Signify NV and AFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signify NV 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.| Signify NV vs. FREYR Battery SA | Signify NV vs. nVent Electric PLC | Signify NV vs. Hubbell | Signify NV vs. Advanced Energy Industries |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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