Correlation Between AFC Ajax and Basic Fit
Can any of the company-specific risk be diversified away by investing in both AFC Ajax and Basic Fit 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 AFC Ajax and Basic Fit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFC Ajax NV and Basic Fit NV, you can compare the effects of market volatilities on AFC Ajax and Basic Fit 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 AFC Ajax with a short position of Basic Fit. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Ajax and Basic Fit.
Diversification Opportunities for AFC Ajax and Basic Fit
Modest diversification
The 3 months correlation between AFC and Basic is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding AFC Ajax NV and Basic Fit NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Fit NV and AFC Ajax 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 AFC Ajax NV are associated (or correlated) with Basic Fit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Fit NV has no effect on the direction of AFC Ajax i.e., AFC Ajax and Basic Fit go up and down completely randomly.
Pair Corralation between AFC Ajax and Basic Fit
Assuming the 90 days trading horizon AFC Ajax is expected to generate 6.36 times less return on investment than Basic Fit. But when comparing it to its historical volatility, AFC Ajax NV is 1.49 times less risky than Basic Fit. It trades about 0.05 of its potential returns per unit of risk. Basic Fit NV is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,993 in Basic Fit NV on January 25, 2024 and sell it today you would earn a total of 135.00 from holding Basic Fit NV or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AFC Ajax NV vs. Basic Fit NV
Performance |
| Timeline |
| AFC Ajax NV |
| Basic Fit NV |
AFC Ajax and Basic Fit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFC Ajax and Basic Fit
The main advantage of trading using opposite AFC Ajax and Basic Fit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Ajax position performs unexpectedly, Basic Fit 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 Basic Fit will offset losses from the drop in Basic Fit's long position.| AFC Ajax vs. Aegon NV | AFC Ajax vs. Koninklijke Philips NV | AFC Ajax vs. Randstad NV | AFC Ajax vs. Akzo Nobel NV |
| Basic Fit vs. Alfen Beheer BV | Basic Fit vs. Kinepolis Group NV | Basic Fit vs. Galapagos NV | Basic Fit vs. PostNL NV |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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