Correlation Between Spotify Technology and AfriTin Mining

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

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

Diversification Opportunities for Spotify Technology and AfriTin Mining

-0.89

Correlation Coefficient

Spotify Technology  AfriTin Mining

Pay attention - limited upside

The 3 months correlation between Spotify and AfriTin is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and AfriTin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfriTin Mining and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with AfriTin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfriTin Mining has no effect on the direction of Spotify Technology i.e., Spotify Technology and AfriTin Mining go up and down completely randomly.

Pair Corralation between Spotify Technology and AfriTin Mining

Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 0.61 times more return on investment than AfriTin Mining. However, Spotify Technology SA is 1.65 times less risky than AfriTin Mining. It trades about 0.29 of its potential returns per unit of risk. AfriTin Mining is currently generating about -0.11 per unit of risk. If you would invest  30,965  in Spotify Technology SA on September 12, 2024 and sell it today you would earn a total of  14,685  from holding Spotify Technology SA or generate 47.42% return on investment over 90 days.

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

Spotify Technology SA  vs.  AfriTin Mining

Spotify Technology

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

AfriTin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AfriTin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Spotify Technology and AfriTin Mining

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

The idea behind Spotify Technology SA and AfriTin Mining 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.