Correlation Between AFC Energy and Various Eateries

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

Diversification Opportunities for AFC Energy and Various Eateries

-0.28

Correlation Coefficient

AFC Energy  Various Eateries

Very good diversification

The 3 months correlation between AFC and Various is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Various Eateries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Various Eateries PLC 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 Various Eateries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Various Eateries PLC has no effect on the direction of AFC Energy i.e., AFC Energy and Various Eateries go up and down completely randomly.

Pair Corralation between AFC Energy and Various Eateries

Assuming the 90 days trading horizon AFC Energy plc is expected to generate 16.61 times more return on investment than Various Eateries. However, AFC Energy is 16.61 times more volatile than Various Eateries PLC. It trades about 0.14 of its potential returns per unit of risk. Various Eateries PLC is currently generating about -0.12 per unit of risk. If you would invest  594.00  in AFC Energy plc on April 24, 2025 and sell it today you would earn a total of  430.00  from holding AFC Energy plc or generate 72.39% return on investment over 90 days.

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

AFC Energy plc  vs.  Various Eateries PLC

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 11 (%) 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.

Various Eateries PLC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with AFC Energy and Various Eateries

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

The idea behind AFC Energy plc and Various Eateries PLC 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.