Correlation Between Afcon Holdings and Gencell

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

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

Diversification Opportunities for Afcon Holdings and Gencell

-0.21

Correlation Coefficient

Afcon Holdings  Gencell

Very good diversification

The 3 months correlation between Afcon and Gencell is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Afcon Holdings and Gencell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencell and Afcon Holdings 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 Afcon Holdings are associated (or correlated) with Gencell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencell has no effect on the direction of Afcon Holdings i.e., Afcon Holdings and Gencell go up and down completely randomly.

Pair Corralation between Afcon Holdings and Gencell

Assuming the 90 days trading horizon Afcon Holdings is expected to generate 0.71 times more return on investment than Gencell. However, Afcon Holdings is 1.4 times less risky than Gencell. It trades about 0.39 of its potential returns per unit of risk. Gencell is currently generating about 0.07 per unit of risk. If you would invest  900,000  in Afcon Holdings on September 13, 2024 and sell it today you would earn a total of  550,000  from holding Afcon Holdings or generate 61.11% return on investment over 90 days.

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

Afcon Holdings  vs.  Gencell

Afcon Holdings

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Afcon Holdings are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Afcon Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Gencell

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gencell are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gencell sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Afcon Holdings and Gencell

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

The idea behind Afcon Holdings and Gencell 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.