Correlation Between Relx PLC and AFC Ajax
Can any of the company-specific risk be diversified away by investing in both Relx PLC and AFC Ajax 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 Relx PLC and AFC Ajax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Relx PLC and AFC Ajax NV, you can compare the effects of market volatilities on Relx PLC and AFC Ajax 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 Relx PLC with a short position of AFC Ajax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Relx PLC and AFC Ajax.
Diversification Opportunities for Relx PLC and AFC Ajax
Very good diversification
The 3 months correlation between Relx and AFC is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Relx PLC and AFC Ajax NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Ajax NV and Relx PLC 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 Relx PLC are associated (or correlated) with AFC Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Ajax NV has no effect on the direction of Relx PLC i.e., Relx PLC and AFC Ajax go up and down completely randomly.
Pair Corralation between Relx PLC and AFC Ajax
Assuming the 90 days trading horizon Relx PLC is expected to generate 1.72 times more return on investment than AFC Ajax. However, Relx PLC is 1.72 times more volatile than AFC Ajax NV. It trades about 0.14 of its potential returns per unit of risk. AFC Ajax NV is currently generating about 0.05 per unit of risk. If you would invest 4,262 in Relx PLC on September 1, 2024 and sell it today you would earn a total of 196.00 from holding Relx PLC or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Relx PLC vs. AFC Ajax NV
Performance |
| Timeline |
| Relx PLC |
| AFC Ajax NV |
Relx PLC and AFC Ajax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Relx PLC and AFC Ajax
The main advantage of trading using opposite Relx PLC and AFC Ajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Relx PLC position performs unexpectedly, AFC Ajax 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 Ajax will offset losses from the drop in AFC Ajax's long position.| Relx PLC vs. Wolters Kluwer NV | Relx PLC vs. Akzo Nobel NV | Relx PLC vs. Randstad NV | Relx PLC vs. Koninklijke KPN NV |
| AFC Ajax vs. Universal Music Group | AFC Ajax vs. AMG Advanced Metallurgical | AFC Ajax vs. Reinet Investments SCA | AFC Ajax vs. Sligro Food Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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