Correlation Between DFS Furniture and Afentra PLC

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

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

Diversification Opportunities for DFS Furniture and Afentra PLC

-0.08

Correlation Coefficient

DFS Furniture  Afentra PLC

Good diversification

The 3 months correlation between DFS and Afentra is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Afentra PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afentra PLC and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Afentra PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afentra PLC has no effect on the direction of DFS Furniture i.e., DFS Furniture and Afentra PLC go up and down completely randomly.

Pair Corralation between DFS Furniture and Afentra PLC

Assuming the 90 days trading horizon DFS Furniture PLC is expected to under-perform the Afentra PLC. In addition to that, DFS Furniture is 1.01 times more volatile than Afentra PLC. It trades about -0.07 of its total potential returns per unit of risk. Afentra PLC is currently generating about 0.12 per unit of volatility. If you would invest  53.00  in Afentra PLC on October 11, 2024 and sell it today you would earn a total of  3.00  from holding Afentra PLC or generate 5.66% return on investment over 90 days.

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

DFS Furniture PLC  vs.  Afentra PLC

DFS Furniture PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DFS Furniture PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DFS Furniture is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Afentra PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with DFS Furniture and Afentra PLC

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

The idea behind DFS Furniture PLC and Afentra PLC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.