Correlation Between AFC Energy and GoldMining

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

Diversification Opportunities for AFC Energy and GoldMining

-0.59

Correlation Coefficient

AFC Energy  GoldMining

Excellent diversification

The 3 months correlation between AFC and GoldMining is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of AFC Energy i.e., AFC Energy and GoldMining go up and down completely randomly.

Pair Corralation between AFC Energy and GoldMining

Assuming the 90 days trading horizon AFC Energy plc is expected to generate 2.98 times more return on investment than GoldMining. However, AFC Energy is 2.98 times more volatile than GoldMining. It trades about 0.12 of its potential returns per unit of risk. GoldMining is currently generating about -0.01 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 Against
Strength	Very Weak
Accuracy	53.23%
Values	Daily Returns

AFC Energy plc  vs.  GoldMining

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.

GoldMining

Risk-Adjusted Performance

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GoldMining is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AFC Energy and GoldMining

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

The idea behind AFC Energy plc and GoldMining 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.