Correlation Between Trencor and Afine Investments
Can any of the company-specific risk be diversified away by investing in both Trencor and Afine Investments 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 Trencor and Afine Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trencor and Afine Investments, you can compare the effects of market volatilities on Trencor and Afine Investments 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 Trencor with a short position of Afine Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trencor and Afine Investments.
Diversification Opportunities for Trencor and Afine Investments
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Trencor and Afine is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Trencor and Afine Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afine Investments and Trencor 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 Trencor are associated (or correlated) with Afine Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afine Investments has no effect on the direction of Trencor i.e., Trencor and Afine Investments go up and down completely randomly.
Pair Corralation between Trencor and Afine Investments
Assuming the 90 days trading horizon Trencor is expected to under-perform the Afine Investments. But the stock apears to be less risky and, when comparing its historical volatility, Trencor is 27.14 times less risky than Afine Investments. The stock trades about -0.02 of its potential returns per unit of risk. The Afine Investments is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 31,434 in Afine Investments on November 28, 2024 and sell it today you would earn a total of 7,166 from holding Afine Investments or generate 22.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trencor vs. Afine Investments
Performance |
| Timeline |
| Trencor |
| Afine Investments |
Trencor and Afine Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trencor and Afine Investments
The main advantage of trading using opposite Trencor and Afine Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trencor position performs unexpectedly, Afine Investments 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 Afine Investments will offset losses from the drop in Afine Investments' long position.| Trencor vs. Frontier Transport Holdings | Trencor vs. Brimstone Investment | Trencor vs. Astral Foods | Trencor vs. RCL Foods |
| Afine Investments vs. Reinet Investments SCA | Afine Investments vs. Hosken Consolidated Investments | Afine Investments vs. Boxer Retail | Afine Investments vs. Ascendis Health |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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