Correlation Between International Business and Afentra PLC

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

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

Diversification Opportunities for International Business and Afentra PLC

0.62

Correlation Coefficient

International Business  Afentra PLC

Poor diversification

The 3 months correlation between International and Afentra is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Afentra PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afentra PLC and International Business 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 International Business Machines 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 International Business i.e., International Business and Afentra PLC go up and down completely randomly.

Pair Corralation between International Business and Afentra PLC

If you would invest  19,971  in International Business Machines on September 3, 2024 and sell it today you would earn a total of  2,770  from holding International Business Machines or generate 13.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

International Business Machine  vs.  Afentra PLC

International Business

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

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 nearly stable basic indicators, Afentra PLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with International Business and Afentra PLC

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