Correlation Between Brait SE and Afine Investments

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

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

Diversification Opportunities for Brait SE and Afine Investments

0.4

Correlation Coefficient

Brait SE  Afine Investments

Very weak diversification

The 3 months correlation between Brait and Afine is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Brait SE and Afine Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afine Investments and Brait SE 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 Brait SE 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 Brait SE i.e., Brait SE and Afine Investments go up and down completely randomly.

Pair Corralation between Brait SE and Afine Investments

Assuming the 90 days trading horizon Brait SE is expected to under-perform the Afine Investments. But the stock apears to be less risky and, when comparing its historical volatility, Brait SE is 37.96 times less risky than Afine Investments. The stock trades about -0.02 of its potential returns per unit of risk. The Afine Investments is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  30,939  in Afine Investments on September 26, 2024 and sell it today you would earn a total of  9,261  from holding Afine Investments or generate 29.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Brait SE  vs.  Afine Investments

Brait SE

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brait SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Afine Investments

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Afine Investments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady 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 Brait SE and Afine Investments

The main advantage of trading using opposite Brait SE and Afine Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brait SE 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 Brait SE 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.