Correlation Between Coreshares Index and Afine Investments

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

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

Diversification Opportunities for Coreshares Index and Afine Investments

0.03

Correlation Coefficient

Coreshares Index  Afine Investments

Significant diversification

The 3 months correlation between Coreshares and Afine is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and Afine Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afine Investments and Coreshares Index 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 Coreshares Index Tracker are associated (or correlated) with Afine Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afine Investments has no effect on the direction of Coreshares Index i.e., Coreshares Index and Afine Investments go up and down completely randomly.

Pair Corralation between Coreshares Index and Afine Investments

Assuming the 90 days trading horizon Coreshares Index Tracker is expected to generate 0.16 times more return on investment than Afine Investments. However, Coreshares Index Tracker is 6.12 times less risky than Afine Investments. It trades about 0.11 of its potential returns per unit of risk. Afine Investments is currently generating about -0.11 per unit of risk. If you would invest  111,000  in Coreshares Index Tracker on October 7, 2024 and sell it today you would earn a total of  2,000  from holding Coreshares Index Tracker or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Coreshares Index Tracker  vs.  Afine Investments

Coreshares Index Tracker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coreshares Index Tracker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Coreshares Index is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Afine Investments

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Coreshares Index and Afine Investments

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

The idea behind Coreshares Index Tracker and Afine Investments 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.