Correlation Between AFC Energy and Expion360

Can any of the company-specific risk be diversified away by investing in both AFC Energy and Expion360 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 Expion360 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 Expion360, you can compare the effects of market volatilities on AFC Energy and Expion360 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 Expion360. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and Expion360.

Diversification Opportunities for AFC Energy and Expion360

-0.04

Correlation Coefficient

AFC Energy  Expion360

Good diversification

The 3 months correlation between AFC and Expion360 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Expion360 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expion360 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 Expion360. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expion360 has no effect on the direction of AFC Energy i.e., AFC Energy and Expion360 go up and down completely randomly.

Pair Corralation between AFC Energy and Expion360

Assuming the 90 days horizon AFC Energy plc is expected to under-perform the Expion360. But the pink sheet apears to be less risky and, when comparing its historical volatility, AFC Energy plc is 1.6 times less risky than Expion360. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Expion360 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  218.00  in Expion360 on October 8, 2024 and sell it today you would lose (7.00) from holding Expion360 or give up 3.21% of portfolio value over 90 days.

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

AFC Energy plc  vs.  Expion360

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.

Expion360

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expion360 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Expion360 is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AFC Energy and Expion360

The main advantage of trading using opposite AFC Energy and Expion360 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, Expion360 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 Expion360 will offset losses from the drop in Expion360's long position.

The idea behind AFC Energy plc and Expion360 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.