Correlation Between Payton L and Afcon Holdings

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

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

Diversification Opportunities for Payton L and Afcon Holdings

0.0

Correlation Coefficient

Payton L  Afcon Holdings

Pay attention - limited upside

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

Pair Corralation between Payton L and Afcon Holdings

If you would invest  0.00  in Payton L on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Payton L or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.96%
Values	Daily Returns

Payton L  vs.  Afcon Holdings

Payton L

Risk-Adjusted Performance

Very Weak

Over the last 90 days Payton L has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Payton L is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Afcon Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Afcon Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Afcon Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Payton L and Afcon Holdings

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

The idea behind Payton L and Afcon Holdings 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.