Correlation Between Afcon Holdings and Best Buy
Can any of the company-specific risk be diversified away by investing in both Afcon Holdings and Best Buy 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 Afcon Holdings and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afcon Holdings and Best Buy Co, you can compare the effects of market volatilities on Afcon Holdings and Best Buy 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 Afcon Holdings with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afcon Holdings and Best Buy.
Diversification Opportunities for Afcon Holdings and Best Buy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Afcon and Best is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Afcon Holdings and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Afcon Holdings 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 Afcon Holdings are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Afcon Holdings i.e., Afcon Holdings and Best Buy go up and down completely randomly.
Pair Corralation between Afcon Holdings and Best Buy
Assuming the 90 days trading horizon Afcon Holdings is expected to under-perform the Best Buy. But the stock apears to be less risky and, when comparing its historical volatility, Afcon Holdings is 1.32 times less risky than Best Buy. The stock trades about -0.28 of its potential returns per unit of risk. The Best Buy Co is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 7,859 in Best Buy Co on January 20, 2024 and sell it today you would lose (259.00) from holding Best Buy Co or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Afcon Holdings vs. Best Buy Co
Performance |
| Timeline |
| Afcon Holdings |
| Best Buy |
Afcon Holdings and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afcon Holdings and Best Buy
The main advantage of trading using opposite Afcon Holdings and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afcon Holdings position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.| Afcon Holdings vs. EN Shoham Business | Afcon Holdings vs. Accel Solutions Group | Afcon Holdings vs. Mivtach Shamir | Afcon Holdings vs. Rani Zim Shopping |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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