Correlation Between AFC Ajax and SPEAR Investments

Can any of the company-specific risk be diversified away by investing in both AFC Ajax and SPEAR Investments 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 SPEAR Investments 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 SPEAR Investments I, you can compare the effects of market volatilities on AFC Ajax and SPEAR Investments 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 SPEAR Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Ajax and SPEAR Investments.

Diversification Opportunities for AFC Ajax and SPEAR Investments

0.71

Correlation Coefficient

AFC Ajax  SPEAR Investments

Poor diversification

The 3 months correlation between AFC and SPEAR is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding AFC Ajax NV and SPEAR Investments I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPEAR Investments 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 SPEAR Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPEAR Investments has no effect on the direction of AFC Ajax i.e., AFC Ajax and SPEAR Investments go up and down completely randomly.

Pair Corralation between AFC Ajax and SPEAR Investments

Assuming the 90 days trading horizon AFC Ajax NV is expected to generate 0.51 times more return on investment than SPEAR Investments. However, AFC Ajax NV is 1.98 times less risky than SPEAR Investments. It trades about -0.09 of its potential returns per unit of risk. SPEAR Investments I is currently generating about -0.13 per unit of risk. If you would invest  1,000.00  in AFC Ajax NV on April 30, 2025 and sell it today you would lose (30.00) from holding AFC Ajax NV or give up 3.0% of portfolio value over 90 days.

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

AFC Ajax NV  vs.  SPEAR Investments I

AFC Ajax NV

Risk-Adjusted Performance

Very Weak

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

SPEAR Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPEAR Investments I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AFC Ajax and SPEAR Investments

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

The idea behind AFC Ajax NV and SPEAR Investments I 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.