Correlation Between Tantalus Systems and AFC Energy

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

By analyzing existing cross correlation between Tantalus Systems Holding and AFC Energy plc, you can compare the effects of market volatilities on Tantalus Systems and AFC 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 Tantalus Systems with a short position of AFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tantalus Systems and AFC Energy.

Diversification Opportunities for Tantalus Systems and AFC Energy

-0.12

Correlation Coefficient

Tantalus Systems  AFC Energy

Good diversification

The 3 months correlation between Tantalus and AFC is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tantalus Systems Holding and AFC Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Energy plc and Tantalus Systems 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 Tantalus Systems Holding are associated (or correlated) with AFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Energy plc has no effect on the direction of Tantalus Systems i.e., Tantalus Systems and AFC Energy go up and down completely randomly.

Pair Corralation between Tantalus Systems and AFC Energy

Assuming the 90 days horizon Tantalus Systems Holding is expected to generate 0.26 times more return on investment than AFC Energy. However, Tantalus Systems Holding is 3.85 times less risky than AFC Energy. It trades about 0.15 of its potential returns per unit of risk. AFC Energy plc is currently generating about 0.0 per unit of risk. If you would invest  109.00  in Tantalus Systems Holding on September 13, 2024 and sell it today you would earn a total of  17.00  from holding Tantalus Systems Holding or generate 15.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Tantalus Systems Holding  vs.  AFC Energy plc

Tantalus Systems Holding

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tantalus Systems Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Tantalus Systems reported solid returns over the last few months and may actually be approaching a breakup point.

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 nearly stable basic indicators, AFC Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tantalus Systems and AFC Energy

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

The idea behind Tantalus Systems Holding and AFC Energy 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.