Correlation Between AFC Ajax and CTT Correios

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

By analyzing existing cross correlation between AFC Ajax NV and CTT Correios de, you can compare the effects of market volatilities on AFC Ajax and CTT Correios 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 Ajax with a short position of CTT Correios. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Ajax and CTT Correios.

Diversification Opportunities for AFC Ajax and CTT Correios

0.79

Correlation Coefficient

AFC Ajax  CTT Correios

Poor diversification

The 3 months correlation between AFC and CTT is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AFC Ajax NV and CTT Correios de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Correios de and AFC Ajax 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 Ajax NV are associated (or correlated) with CTT Correios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Correios de has no effect on the direction of AFC Ajax i.e., AFC Ajax and CTT Correios go up and down completely randomly.

Pair Corralation between AFC Ajax and CTT Correios

Assuming the 90 days trading horizon AFC Ajax is expected to generate 18.54 times less return on investment than CTT Correios. But when comparing it to its historical volatility, AFC Ajax NV is 2.17 times less risky than CTT Correios. It trades about 0.05 of its potential returns per unit of risk. CTT Correios de is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  523.00  in CTT Correios de on December 27, 2024 and sell it today you would earn a total of  235.00  from holding CTT Correios de or generate 44.93% return on investment over 90 days.

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

AFC Ajax NV  vs.  CTT Correios de

AFC Ajax NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AFC Ajax NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AFC Ajax is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CTT Correios de

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CTT Correios de are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CTT Correios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AFC Ajax and CTT Correios

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

The idea behind AFC Ajax NV and CTT Correios de 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.