Correlation Between AfriTin Mining and CVR Energy

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

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

Diversification Opportunities for AfriTin Mining and CVR Energy

0.75

Correlation Coefficient

AfriTin Mining  CVR Energy

Poor diversification

The 3 months correlation between AfriTin and CVR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AfriTin Mining and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and AfriTin Mining 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 AfriTin Mining are associated (or correlated) with CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of AfriTin Mining i.e., AfriTin Mining and CVR Energy go up and down completely randomly.

Pair Corralation between AfriTin Mining and CVR Energy

Assuming the 90 days trading horizon AfriTin Mining is expected to generate 23.43 times less return on investment than CVR Energy. In addition to that, AfriTin Mining is 1.39 times more volatile than CVR Energy. It trades about 0.01 of its total potential returns per unit of risk. CVR Energy is currently generating about 0.21 per unit of volatility. If you would invest  1,638  in CVR Energy on September 5, 2024 and sell it today you would earn a total of  297.00  from holding CVR Energy or generate 18.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.3%
Values	Daily Returns

AfriTin Mining  vs.  CVR Energy

AfriTin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AfriTin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AfriTin Mining and CVR Energy

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

The idea behind AfriTin Mining and CVR Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.