Correlation Between Afentra PLC and Rockhopper Exploration

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

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

Diversification Opportunities for Afentra PLC and Rockhopper Exploration

0.0

Correlation Coefficient

Afentra PLC  Rockhopper Exploration

Pay attention - limited upside

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

Pair Corralation between Afentra PLC and Rockhopper Exploration

If you would invest  22.00  in Rockhopper Exploration plc on December 1, 2024 and sell it today you would earn a total of  28.00  from holding Rockhopper Exploration plc or generate 127.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Afentra PLC  vs.  Rockhopper Exploration plc

Afentra PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Afentra PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Afentra PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Rockhopper Exploration

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rockhopper Exploration plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Rockhopper Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Afentra PLC and Rockhopper Exploration

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

The idea behind Afentra PLC and Rockhopper Exploration 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.