Correlation Between Afya and China Liberal

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

By analyzing existing cross correlation between Afya and China Liberal Education, you can compare the effects of market volatilities on Afya and China Liberal 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 Afya with a short position of China Liberal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and China Liberal.

Diversification Opportunities for Afya and China Liberal

0.22

Correlation Coefficient

Afya  China Liberal

Modest diversification

The 3 months correlation between Afya and China is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Afya and China Liberal Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Liberal Education and Afya 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 Afya are associated (or correlated) with China Liberal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Liberal Education has no effect on the direction of Afya i.e., Afya and China Liberal go up and down completely randomly.

Pair Corralation between Afya and China Liberal

Given the investment horizon of 90 days Afya is expected to under-perform the China Liberal. But the stock apears to be less risky and, when comparing its historical volatility, Afya is 2.42 times less risky than China Liberal. The stock trades about -0.18 of its potential returns per unit of risk. The China Liberal Education is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  21.00  in China Liberal Education on September 19, 2024 and sell it today you would lose (1.00) from holding China Liberal Education or give up 4.76% of portfolio value over 90 days.

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

Afya  vs.  China Liberal Education

Afya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

China Liberal Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Liberal Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Afya and China Liberal

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

The idea behind Afya and China Liberal Education 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.