Correlation Between NeoVolta Common and AFC Energy

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

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

Diversification Opportunities for NeoVolta Common and AFC Energy

0.74

Correlation Coefficient

NeoVolta Common  AFC Energy

Poor diversification

The 3 months correlation between NeoVolta and AFC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NeoVolta Common Stock 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 NeoVolta Common 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 NeoVolta Common Stock 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 NeoVolta Common i.e., NeoVolta Common and AFC Energy go up and down completely randomly.

Pair Corralation between NeoVolta Common and AFC Energy

Given the investment horizon of 90 days NeoVolta Common Stock is expected to under-perform the AFC Energy. But the stock apears to be less risky and, when comparing its historical volatility, NeoVolta Common Stock is 1.03 times less risky than AFC Energy. The stock trades about -0.16 of its potential returns per unit of risk. The AFC Energy plc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  12.00  in AFC Energy plc on December 28, 2024 and sell it today you would lose (3.60) from holding AFC Energy plc or give up 30.0% of portfolio value over 90 days.

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

NeoVolta Common Stock  vs.  AFC Energy plc

NeoVolta Common Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days NeoVolta Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 NeoVolta Common and AFC Energy

The main advantage of trading using opposite NeoVolta Common and AFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NeoVolta Common 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 NeoVolta Common Stock 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.