Correlation Between Afya and Jeld Wen

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Can any of the company-specific risk be diversified away by investing in both Afya and Jeld Wen 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 Jeld Wen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Jeld Wen Holding, you can compare the effects of market volatilities on Afya and Jeld Wen 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 Jeld Wen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Jeld Wen.

Diversification Opportunities for Afya and Jeld Wen

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Afya and Jeld is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding 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 Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of Afya i.e., Afya and Jeld Wen go up and down completely randomly.

Pair Corralation between Afya and Jeld Wen

Given the investment horizon of 90 days Afya is expected to generate 0.75 times more return on investment than Jeld Wen. However, Afya is 1.33 times less risky than Jeld Wen. It trades about -0.19 of its potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.5 per unit of risk. If you would invest  1,686  in Afya on September 24, 2024 and sell it today you would lose (136.00) from holding Afya or give up 8.07% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Afya  vs.  Jeld Wen Holding

 Performance 
       Timeline  
Afya 

Risk-Adjusted Performance

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Weak
 
Strong
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.
Jeld Wen Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jeld Wen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Afya and Jeld Wen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Afya and Jeld Wen

The main advantage of trading using opposite Afya and Jeld Wen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Jeld Wen 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 Jeld Wen will offset losses from the drop in Jeld Wen's long position.
The idea behind Afya and Jeld Wen Holding 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.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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