Correlation Between Afya and Udemy

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

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

Diversification Opportunities for Afya and Udemy

0.47

Correlation Coefficient

Afya  Udemy

Very weak diversification

The 3 months correlation between Afya and Udemy is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Udemy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Udemy Inc 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 Udemy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Udemy Inc has no effect on the direction of Afya i.e., Afya and Udemy go up and down completely randomly.

Pair Corralation between Afya and Udemy

Given the investment horizon of 90 days Afya is expected to generate 0.54 times more return on investment than Udemy. However, Afya is 1.85 times less risky than Udemy. It trades about 0.1 of its potential returns per unit of risk. Udemy Inc is currently generating about 0.04 per unit of risk. If you would invest  1,565  in Afya on December 27, 2024 and sell it today you would earn a total of  219.00  from holding Afya or generate 13.99% return on investment over 90 days.

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

Afya  vs.  Udemy Inc

Afya

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Afya are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Afya sustained solid returns over the last few months and may actually be approaching a breakup point.

Udemy Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Udemy Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Udemy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Afya and Udemy

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

The idea behind Afya and Udemy Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.