Correlation Between Afine Investments and Gemfields

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

By analyzing existing cross correlation between Afine Investments and Gemfields Group, you can compare the effects of market volatilities on Afine Investments and Gemfields 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 Gemfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afine Investments and Gemfields.

Diversification Opportunities for Afine Investments and Gemfields

-0.22

Correlation Coefficient

Afine Investments  Gemfields

Very good diversification

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

Pair Corralation between Afine Investments and Gemfields

Assuming the 90 days trading horizon Afine Investments is expected to under-perform the Gemfields. But the stock apears to be less risky and, when comparing its historical volatility, Afine Investments is 3.89 times less risky than Gemfields. The stock trades about -0.05 of its potential returns per unit of risk. The Gemfields Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  15,200  in Gemfields Group on December 28, 2024 and sell it today you would lose (1,100) from holding Gemfields Group or give up 7.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Afine Investments  vs.  Gemfields Group

Afine Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Afine Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Afine Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Gemfields Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gemfields Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Gemfields is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Afine Investments and Gemfields

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

The idea behind Afine Investments and Gemfields Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.