Correlation Between Loop Energy and AFC Energy

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

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

Diversification Opportunities for Loop Energy and AFC Energy

0.0

Correlation Coefficient

Loop Energy  AFC Energy

Pay attention - limited upside

The 3 months correlation between Loop and AFC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Loop Energy and AFC Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Energy plc and Loop Energy 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 Loop Energy are associated (or correlated) with AFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Energy plc has no effect on the direction of Loop Energy i.e., Loop Energy and AFC Energy go up and down completely randomly.

Pair Corralation between Loop Energy and AFC Energy

If you would invest  8.00  in Loop Energy on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Loop Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Loop Energy  vs.  AFC Energy plc

Loop Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loop Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Loop Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AFC Energy plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days AFC Energy plc 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 basic 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 Loop Energy and AFC Energy

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

The idea behind Loop Energy and AFC Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.