Correlation Between Afine Investments and Remgro

Can any of the company-specific risk be diversified away by investing in both Afine Investments and Remgro 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 Afine Investments and Remgro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Afine Investments and Remgro, you can compare the effects of market volatilities on Afine Investments and Remgro 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 Afine Investments with a short position of Remgro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afine Investments and Remgro.

Diversification Opportunities for Afine Investments and Remgro

-0.51

Correlation Coefficient

Afine Investments  Remgro

Excellent diversification

The 3 months correlation between Afine and Remgro is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Afine Investments and Remgro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remgro and Afine Investments 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 Afine Investments are associated (or correlated) with Remgro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remgro has no effect on the direction of Afine Investments i.e., Afine Investments and Remgro go up and down completely randomly.

Pair Corralation between Afine Investments and Remgro

Assuming the 90 days trading horizon Afine Investments is expected to generate 2.74 times less return on investment than Remgro. In addition to that, Afine Investments is 1.33 times more volatile than Remgro. It trades about 0.03 of its total potential returns per unit of risk. Remgro is currently generating about 0.1 per unit of volatility. If you would invest  1,420,005  in Remgro on September 4, 2024 and sell it today you would earn a total of  126,895  from holding Remgro or generate 8.94% return on investment over 90 days.

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

Afine Investments  vs.  Remgro

Afine Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Afine Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Afine Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Remgro

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Remgro are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Remgro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Afine Investments and Remgro

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

The idea behind Afine Investments and Remgro 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.