Correlation Between Carlyle and AFC Gamma

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

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

Diversification Opportunities for Carlyle and AFC Gamma

0.5

Correlation Coefficient

Carlyle  AFC Gamma

Very weak diversification

The 3 months correlation between Carlyle and AFC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and AFC Gamma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Gamma and Carlyle 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 Carlyle Group are associated (or correlated) with AFC Gamma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Gamma has no effect on the direction of Carlyle i.e., Carlyle and AFC Gamma go up and down completely randomly.

Pair Corralation between Carlyle and AFC Gamma

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 0.81 times more return on investment than AFC Gamma. However, Carlyle Group is 1.23 times less risky than AFC Gamma. It trades about -0.06 of its potential returns per unit of risk. AFC Gamma is currently generating about -0.13 per unit of risk. If you would invest  5,053  in Carlyle Group on December 27, 2024 and sell it today you would lose (544.00) from holding Carlyle Group or give up 10.77% of portfolio value over 90 days.

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

Carlyle Group  vs.  AFC Gamma

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AFC Gamma

Risk-Adjusted Performance

Very Weak

Over the last 90 days AFC Gamma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Carlyle and AFC Gamma

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

The idea behind Carlyle Group and AFC Gamma 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.