Correlation Between AFC Energy and AMG Advanced

Can any of the company-specific risk be diversified away by investing in both AFC Energy and AMG Advanced 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 AMG Advanced 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 AMG Advanced Metallurgical, you can compare the effects of market volatilities on AFC Energy and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and AMG Advanced.

Diversification Opportunities for AFC Energy and AMG Advanced

0.49

Correlation Coefficient

AFC Energy  AMG Advanced

Very weak diversification

The 3 months correlation between AFC and AMG is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of AFC Energy i.e., AFC Energy and AMG Advanced go up and down completely randomly.

Pair Corralation between AFC Energy and AMG Advanced

Assuming the 90 days trading horizon AFC Energy plc is expected to generate 2.63 times more return on investment than AMG Advanced. However, AFC Energy is 2.63 times more volatile than AMG Advanced Metallurgical. It trades about 0.12 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about 0.26 per unit of risk. If you would invest  649.00  in AFC Energy plc on April 25, 2025 and sell it today you would earn a total of  363.00  from holding AFC Energy plc or generate 55.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AFC Energy plc  vs.  AMG Advanced Metallurgical

AFC Energy plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AFC Energy plc are ranked lower than 9 (%) 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.

AMG Advanced Metallu

Risk-Adjusted Performance

Solid

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

Pair Trading with AFC Energy and AMG Advanced

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

The idea behind AFC Energy plc and AMG Advanced Metallurgical 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.