Correlation Between Preformed Line and AFC Energy
Can any of the company-specific risk be diversified away by investing in both Preformed Line 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 Preformed Line and AFC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preformed Line Products and AFC Energy plc, you can compare the effects of market volatilities on Preformed Line 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 Preformed Line with a short position of AFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preformed Line and AFC Energy.
Diversification Opportunities for Preformed Line and AFC Energy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Preformed and AFC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Preformed Line Products 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 Preformed Line 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 Preformed Line Products 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 Preformed Line i.e., Preformed Line and AFC Energy go up and down completely randomly.
Pair Corralation between Preformed Line and AFC Energy
Given the investment horizon of 90 days Preformed Line Products is expected to generate 0.56 times more return on investment than AFC Energy. However, Preformed Line Products is 1.77 times less risky than AFC Energy. It trades about 0.04 of its potential returns per unit of risk. AFC Energy plc is currently generating about 0.0 per unit of risk. If you would invest 9,125 in Preformed Line Products on August 28, 2024 and sell it today you would earn a total of 4,640 from holding Preformed Line Products or generate 50.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preformed Line Products vs. AFC Energy plc
Performance |
| Timeline |
| Preformed Line Products |
| AFC Energy plc |
Preformed Line and AFC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preformed Line and AFC Energy
The main advantage of trading using opposite Preformed Line and AFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preformed Line 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.| Preformed Line vs. Kimball Electronics | Preformed Line vs. nVent Electric PLC | Preformed Line vs. Espey Mfg Electronics | Preformed Line vs. Hubbell |
| AFC Energy vs. Legrand SA ADR | AFC Energy vs. Loop Energy | AFC Energy vs. Sunrise New Energy | AFC Energy vs. Alfen NV |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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