Correlation Between AFC Energy and Eos Energy

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

Diversification Opportunities for AFC Energy and Eos Energy

-0.14

Correlation Coefficient

AFC Energy  Eos Energy

Good diversification

The 3 months correlation between AFC and Eos is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Eos Energy Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eos Energy Enterprises 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 Eos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eos Energy Enterprises has no effect on the direction of AFC Energy i.e., AFC Energy and Eos Energy go up and down completely randomly.

Pair Corralation between AFC Energy and Eos Energy

Assuming the 90 days horizon AFC Energy plc is expected to under-perform the Eos Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, AFC Energy plc is 2.52 times less risky than Eos Energy. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Eos Energy Enterprises is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Eos Energy Enterprises on September 22, 2024 and sell it today you would earn a total of  39.00  from holding Eos Energy Enterprises or generate 278.57% 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.  Eos Energy Enterprises

AFC Energy plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFC Energy plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eos Energy Enterprises

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Eos Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AFC Energy and Eos Energy

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

The idea behind AFC Energy plc and Eos Energy Enterprises 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.