Correlation Between Bt Brands and Afya

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

By analyzing existing cross correlation between Bt Brands and Afya, you can compare the effects of market volatilities on Bt Brands and Afya 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 Bt Brands with a short position of Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and Afya.

Diversification Opportunities for Bt Brands and Afya

0.15

Correlation Coefficient

Bt Brands  Afya

Average diversification

The 3 months correlation between BTBD and Afya is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Bt Brands 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 Bt Brands are associated (or correlated) with Afya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afya has no effect on the direction of Bt Brands i.e., Bt Brands and Afya go up and down completely randomly.

Pair Corralation between Bt Brands and Afya

Given the investment horizon of 90 days Bt Brands is expected to generate 2.47 times more return on investment than Afya. However, Bt Brands is 2.47 times more volatile than Afya. It trades about 0.0 of its potential returns per unit of risk. Afya is currently generating about -0.07 per unit of risk. If you would invest  246.00  in Bt Brands on September 20, 2024 and sell it today you would lose (82.00) from holding Bt Brands or give up 33.33% of portfolio value over 90 days.

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

Bt Brands  vs.  Afya

Bt Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Bt Brands and Afya

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

The idea behind Bt Brands and Afya 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.