Correlation Between AFC Energy and Cardinal Health

Can any of the company-specific risk be diversified away by investing in both AFC Energy and Cardinal Health 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 AFC Energy and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AFC Energy plc and Cardinal Health, you can compare the effects of market volatilities on AFC Energy and Cardinal Health 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 AFC Energy with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and Cardinal Health.

Diversification Opportunities for AFC Energy and Cardinal Health

0.9

Correlation Coefficient

AFC Energy  Cardinal Health

Almost no diversification

The 3 months correlation between AFC and Cardinal is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and AFC Energy 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 AFC Energy plc are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of AFC Energy i.e., AFC Energy and Cardinal Health go up and down completely randomly.

Pair Corralation between AFC Energy and Cardinal Health

Assuming the 90 days trading horizon AFC Energy plc is expected to generate 7.51 times more return on investment than Cardinal Health. However, AFC Energy is 7.51 times more volatile than Cardinal Health. It trades about 0.16 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.26 per unit of risk. If you would invest  550.00  in AFC Energy plc on April 20, 2025 and sell it today you would earn a total of  522.00  from holding AFC Energy plc or generate 94.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

AFC Energy plc  vs.  Cardinal Health

AFC Energy plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AFC Energy plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, AFC Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cardinal Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cardinal Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AFC Energy and Cardinal Health

The main advantage of trading using opposite AFC Energy and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.

The idea behind AFC Energy plc and Cardinal Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.