Correlation Between Chicago Atlantic and AFC Gamma

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

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

Diversification Opportunities for Chicago Atlantic and AFC Gamma

-0.54

Correlation Coefficient

Chicago Atlantic  AFC Gamma

Excellent diversification

The 3 months correlation between Chicago and AFC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic Real and AFC Gamma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Gamma and Chicago Atlantic 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 Chicago Atlantic Real are associated (or correlated) with AFC Gamma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Gamma has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and AFC Gamma go up and down completely randomly.

Pair Corralation between Chicago Atlantic and AFC Gamma

Given the investment horizon of 90 days Chicago Atlantic Real is expected to generate 0.44 times more return on investment than AFC Gamma. However, Chicago Atlantic Real is 2.28 times less risky than AFC Gamma. It trades about 0.03 of its potential returns per unit of risk. AFC Gamma is currently generating about -0.14 per unit of risk. If you would invest  1,555  in Chicago Atlantic Real on October 6, 2024 and sell it today you would earn a total of  6.00  from holding Chicago Atlantic Real or generate 0.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chicago Atlantic Real  vs.  AFC Gamma

Chicago Atlantic Real

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic Real are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Chicago Atlantic is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

AFC Gamma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFC Gamma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental 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 Chicago Atlantic and AFC Gamma

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

The idea behind Chicago Atlantic Real and AFC Gamma 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.