Correlation Between Afya and Consilium Acquisition

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

By analyzing existing cross correlation between Afya and Consilium Acquisition I, you can compare the effects of market volatilities on Afya and Consilium Acquisition 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 Consilium Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Consilium Acquisition.

Diversification Opportunities for Afya and Consilium Acquisition

-0.25

Correlation Coefficient

Afya  Consilium Acquisition

Very good diversification

The 3 months correlation between Afya and Consilium is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Consilium Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consilium Acquisition 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 Consilium Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consilium Acquisition has no effect on the direction of Afya i.e., Afya and Consilium Acquisition go up and down completely randomly.

Pair Corralation between Afya and Consilium Acquisition

Given the investment horizon of 90 days Afya is expected to generate 0.64 times more return on investment than Consilium Acquisition. However, Afya is 1.56 times less risky than Consilium Acquisition. It trades about -0.03 of its potential returns per unit of risk. Consilium Acquisition I is currently generating about -0.07 per unit of risk. If you would invest  1,656  in Afya on October 25, 2024 and sell it today you would lose (82.00) from holding Afya or give up 4.95% of portfolio value over 90 days.

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

Afya  vs.  Consilium Acquisition I

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 somewhat strong basic indicators, Afya is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Consilium Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Afya and Consilium Acquisition

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

The idea behind Afya and Consilium Acquisition 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .