Correlation Between Rush Factory and Afarak Group

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

By analyzing existing cross correlation between Rush Factory Oyj and Afarak Group Oyj, you can compare the effects of market volatilities on Rush Factory and Afarak Group 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 Rush Factory with a short position of Afarak Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Factory and Afarak Group.

Diversification Opportunities for Rush Factory and Afarak Group

-0.66

Correlation Coefficient

Rush Factory  Afarak Group

Excellent diversification

The 3 months correlation between Rush and Afarak is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Rush Factory Oyj and Afarak Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afarak Group Oyj and Rush Factory 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 Rush Factory Oyj are associated (or correlated) with Afarak Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afarak Group Oyj has no effect on the direction of Rush Factory i.e., Rush Factory and Afarak Group go up and down completely randomly.

Pair Corralation between Rush Factory and Afarak Group

Assuming the 90 days trading horizon Rush Factory Oyj is expected to generate 3.63 times more return on investment than Afarak Group. However, Rush Factory is 3.63 times more volatile than Afarak Group Oyj. It trades about 0.14 of its potential returns per unit of risk. Afarak Group Oyj is currently generating about -0.02 per unit of risk. If you would invest  34.00  in Rush Factory Oyj on September 2, 2024 and sell it today you would earn a total of  32.00  from holding Rush Factory Oyj or generate 94.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Rush Factory Oyj  vs.  Afarak Group Oyj

Rush Factory Oyj

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Factory Oyj are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Rush Factory exhibited solid returns over the last few months and may actually be approaching a breakup point.

Afarak Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afarak Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Afarak Group is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Rush Factory and Afarak Group

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

The idea behind Rush Factory Oyj and Afarak Group Oyj 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.