Correlation Between AFC Ajax and Sporting Clube

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

Diversification Opportunities for AFC Ajax and Sporting Clube

-0.06

Correlation Coefficient

AFC Ajax  Sporting Clube

Good diversification

The 3 months correlation between AFC and Sporting is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding AFC Ajax NV and Sporting Clube de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sporting Clube 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 Sporting Clube. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sporting Clube de has no effect on the direction of AFC Ajax i.e., AFC Ajax and Sporting Clube go up and down completely randomly.

Pair Corralation between AFC Ajax and Sporting Clube

Assuming the 90 days trading horizon AFC Ajax NV is expected to under-perform the Sporting Clube. But the stock apears to be less risky and, when comparing its historical volatility, AFC Ajax NV is 2.97 times less risky than Sporting Clube. The stock trades about -0.01 of its potential returns per unit of risk. The Sporting Clube de is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Sporting Clube de on September 16, 2024 and sell it today you would earn a total of  14.00  from holding Sporting Clube de or generate 17.07% return on investment over 90 days.

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

AFC Ajax NV  vs.  Sporting Clube de

AFC Ajax NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFC Ajax NV has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Sporting Clube de

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sporting Clube de are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Sporting Clube may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AFC Ajax and Sporting Clube

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

The idea behind AFC Ajax NV and Sporting Clube 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.