Correlation Between Afine Investments and Raubex

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

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

Diversification Opportunities for Afine Investments and Raubex

0.7

Correlation Coefficient

Afine Investments  Raubex

Poor diversification

The 3 months correlation between Afine and Raubex is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Afine Investments and Raubex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raubex 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 Raubex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raubex has no effect on the direction of Afine Investments i.e., Afine Investments and Raubex go up and down completely randomly.

Pair Corralation between Afine Investments and Raubex

Assuming the 90 days trading horizon Afine Investments is expected to generate 0.69 times more return on investment than Raubex. However, Afine Investments is 1.44 times less risky than Raubex. It trades about -0.05 of its potential returns per unit of risk. Raubex is currently generating about -0.14 per unit of risk. If you would invest  40,200  in Afine Investments on December 27, 2024 and sell it today you would lose (1,600) from holding Afine Investments or give up 3.98% of portfolio value over 90 days.

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

Afine Investments  vs.  Raubex

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.

Raubex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Raubex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Afine Investments and Raubex

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

The idea behind Afine Investments and Raubex 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.