Correlation Between Afine Investments and Ascendis Health

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Can any of the company-specific risk be diversified away by investing in both Afine Investments and Ascendis Health 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 Afine Investments and Ascendis Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afine Investments and Ascendis Health, you can compare the effects of market volatilities on Afine Investments and Ascendis Health 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 Afine Investments with a short position of Ascendis Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afine Investments and Ascendis Health.

Diversification Opportunities for Afine Investments and Ascendis Health

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Afine and Ascendis is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Afine Investments and Ascendis Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Health and Afine Investments 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 Afine Investments are associated (or correlated) with Ascendis Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Health has no effect on the direction of Afine Investments i.e., Afine Investments and Ascendis Health go up and down completely randomly.

Pair Corralation between Afine Investments and Ascendis Health

Assuming the 90 days trading horizon Afine Investments is expected to generate 37.65 times more return on investment than Ascendis Health. However, Afine Investments is 37.65 times more volatile than Ascendis Health. It trades about 0.11 of its potential returns per unit of risk. Ascendis Health is currently generating about 0.03 per unit of risk. If you would invest  30,939  in Afine Investments on September 26, 2024 and sell it today you would earn a total of  9,261  from holding Afine Investments or generate 29.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Afine Investments  vs.  Ascendis Health

 Performance 
       Timeline  
Afine Investments 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Afine Investments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Afine Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.
Ascendis Health 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ascendis Health are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ascendis Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Afine Investments and Ascendis Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Afine Investments and Ascendis Health

The main advantage of trading using opposite Afine Investments and Ascendis Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afine Investments position performs unexpectedly, Ascendis Health 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 Ascendis Health will offset losses from the drop in Ascendis Health's long position.
The idea behind Afine Investments and Ascendis Health 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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