Correlation Between Afya and CROWN

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

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

Diversification Opportunities for Afya and CROWN

0.43

Correlation Coefficient

Afya  CROWN

Very weak diversification

The 3 months correlation between Afya and CROWN is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Afya and CROWN CASTLE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTERNA 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTERNA has no effect on the direction of Afya i.e., Afya and CROWN go up and down completely randomly.

Pair Corralation between Afya and CROWN

Given the investment horizon of 90 days Afya is expected to generate 2.08 times more return on investment than CROWN. However, Afya is 2.08 times more volatile than CROWN CASTLE INTERNATIONAL. It trades about 0.11 of its potential returns per unit of risk. CROWN CASTLE INTERNATIONAL is currently generating about -0.14 per unit of risk. If you would invest  1,550  in Afya on December 23, 2024 and sell it today you would earn a total of  243.00  from holding Afya or generate 15.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Afya  vs.  CROWN CASTLE INTERNATIONAL

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.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Afya and CROWN

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

The idea behind Afya and CROWN CASTLE INTERNATIONAL 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.