Correlation Between Dalata Hotel and Afya

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

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

Diversification Opportunities for Dalata Hotel and Afya

0.0

Correlation Coefficient

Dalata Hotel  Afya

Pay attention - limited upside

The 3 months correlation between Dalata and Afya is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Dalata Hotel 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 Dalata Hotel Group 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 Dalata Hotel i.e., Dalata Hotel and Afya go up and down completely randomly.

Pair Corralation between Dalata Hotel and Afya

Assuming the 90 days horizon Dalata Hotel Group is expected to generate 0.9 times more return on investment than Afya. However, Dalata Hotel Group is 1.11 times less risky than Afya. It trades about 0.04 of its potential returns per unit of risk. Afya is currently generating about 0.02 per unit of risk. If you would invest  336.00  in Dalata Hotel Group on October 4, 2024 and sell it today you would earn a total of  152.00  from holding Dalata Hotel Group or generate 45.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Dalata Hotel Group  vs.  Afya

Dalata Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalata Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dalata Hotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 somewhat strong basic indicators, Afya is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dalata Hotel and Afya

The main advantage of trading using opposite Dalata Hotel and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalata Hotel 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 Dalata Hotel Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.