Correlation Between Afya and Worthington Steel

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

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

Diversification Opportunities for Afya and Worthington Steel

0.0

Correlation Coefficient

Afya  Worthington Steel

Pay attention - limited upside

The 3 months correlation between Afya and Worthington is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel 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 Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Afya i.e., Afya and Worthington Steel go up and down completely randomly.

Pair Corralation between Afya and Worthington Steel

Given the investment horizon of 90 days Afya is expected to generate 1.06 times more return on investment than Worthington Steel. However, Afya is 1.06 times more volatile than Worthington Steel. It trades about -0.27 of its potential returns per unit of risk. Worthington Steel is currently generating about -0.36 per unit of risk. If you would invest  1,627  in Afya on September 20, 2024 and sell it today you would lose (169.00) from holding Afya or give up 10.39% of portfolio value over 90 days.

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

Afya  vs.  Worthington Steel

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.

Worthington Steel

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with Afya and Worthington Steel

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

The idea behind Afya and Worthington Steel 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.