Correlation Between Aferian Plc and Saga Communications

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

By analyzing existing cross correlation between Aferian Plc and Saga Communications, you can compare the effects of market volatilities on Aferian Plc and Saga Communications 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 Aferian Plc with a short position of Saga Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aferian Plc and Saga Communications.

Diversification Opportunities for Aferian Plc and Saga Communications

0.0

Correlation Coefficient

Aferian Plc  Saga Communications

Pay attention - limited upside

The 3 months correlation between Aferian and Saga is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aferian Plc and Saga Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Communications and Aferian Plc 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 Aferian Plc are associated (or correlated) with Saga Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Communications has no effect on the direction of Aferian Plc i.e., Aferian Plc and Saga Communications go up and down completely randomly.

Pair Corralation between Aferian Plc and Saga Communications

If you would invest  1,100  in Saga Communications on December 27, 2024 and sell it today you would earn a total of  174.00  from holding Saga Communications or generate 15.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Aferian Plc  vs.  Saga Communications

Aferian Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aferian Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Aferian Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Saga Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saga Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Saga Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aferian Plc and Saga Communications

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

The idea behind Aferian Plc and Saga Communications 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.