Correlation Between Afya and 655844CJ5

Can any of the company-specific risk be diversified away by investing in both Afya and 655844CJ5 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 655844CJ5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Afya and NSC 41 15 MAY 21, you can compare the effects of market volatilities on Afya and 655844CJ5 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 655844CJ5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and 655844CJ5.

Diversification Opportunities for Afya and 655844CJ5

0.24

Correlation Coefficient

Afya  655844CJ5

Modest diversification

The 3 months correlation between Afya and 655844CJ5 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Afya and NSC 41 15 MAY 21 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSC 41 15 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 655844CJ5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSC 41 15 has no effect on the direction of Afya i.e., Afya and 655844CJ5 go up and down completely randomly.

Pair Corralation between Afya and 655844CJ5

Given the investment horizon of 90 days Afya is expected to under-perform the 655844CJ5. But the stock apears to be less risky and, when comparing its historical volatility, Afya is 1.06 times less risky than 655844CJ5. The stock trades about -0.15 of its potential returns per unit of risk. The NSC 41 15 MAY 21 is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  7,384  in NSC 41 15 MAY 21 on October 11, 2024 and sell it today you would lose (108.00) from holding NSC 41 15 MAY 21 or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	61.9%
Values	Daily Returns

Afya  vs.  NSC 41 15 MAY 21

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.

NSC 41 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSC 41 15 MAY 21 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 655844CJ5 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Afya and 655844CJ5

The main advantage of trading using opposite Afya and 655844CJ5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, 655844CJ5 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 655844CJ5 will offset losses from the drop in 655844CJ5's long position.

The idea behind Afya and NSC 41 15 MAY 21 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.