Correlation Between SFS REAL and AFROMEDIA PLC

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

By analyzing existing cross correlation between SFS REAL ESTATE and AFROMEDIA PLC, you can compare the effects of market volatilities on SFS REAL and AFROMEDIA PLC 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 SFS REAL with a short position of AFROMEDIA PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFS REAL and AFROMEDIA PLC.

Diversification Opportunities for SFS REAL and AFROMEDIA PLC

1.0

Correlation Coefficient

SFS REAL  AFROMEDIA PLC

No risk reduction

The 3 months correlation between SFS and AFROMEDIA is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SFS REAL ESTATE and AFROMEDIA PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFROMEDIA PLC and SFS REAL 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 SFS REAL ESTATE are associated (or correlated) with AFROMEDIA PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFROMEDIA PLC has no effect on the direction of SFS REAL i.e., SFS REAL and AFROMEDIA PLC go up and down completely randomly.

Pair Corralation between SFS REAL and AFROMEDIA PLC

If you would invest  24.00  in AFROMEDIA PLC on September 28, 2024 and sell it today you would earn a total of  0.00  from holding AFROMEDIA PLC or generate 0.0% return on investment over 90 days.

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

SFS REAL ESTATE  vs.  AFROMEDIA PLC

SFS REAL ESTATE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFS REAL ESTATE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, SFS REAL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

AFROMEDIA PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFROMEDIA PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, AFROMEDIA PLC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SFS REAL and AFROMEDIA PLC

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

The idea behind SFS REAL ESTATE and AFROMEDIA 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.