Correlation Between AFC Energy and JLEN Environmental

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

Diversification Opportunities for AFC Energy and JLEN Environmental

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between AFC and JLEN is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets 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 JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of AFC Energy i.e., AFC Energy and JLEN Environmental go up and down completely randomly.

Pair Corralation between AFC Energy and JLEN Environmental

Assuming the 90 days trading horizon AFC Energy is expected to generate 20.47 times less return on investment than JLEN Environmental. But when comparing it to its historical volatility, AFC Energy plc is 20.7 times less risky than JLEN Environmental. It trades about 0.16 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  7,177  in JLEN Environmental Assets on April 20, 2025 and sell it today you would earn a total of  973.00  from holding JLEN Environmental Assets or generate 13.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AFC Energy plc  vs.  JLEN Environmental Assets

 Performance 
       Timeline  
AFC Energy plc 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
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.
JLEN Environmental Assets 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in JLEN Environmental Assets are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JLEN Environmental unveiled solid returns over the last few months and may actually be approaching a breakup point.

AFC Energy and JLEN Environmental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AFC Energy and JLEN Environmental

The main advantage of trading using opposite AFC Energy and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, JLEN Environmental 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.
The idea behind AFC Energy plc and JLEN Environmental Assets 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.
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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