Correlation Between Golden Sun and Afya

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

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

Diversification Opportunities for Golden Sun and Afya

0.17

Correlation Coefficient

Golden Sun  Afya

Average diversification

The 3 months correlation between Golden and Afya is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Golden Sun Education and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Golden Sun 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 Golden Sun Education 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 Golden Sun i.e., Golden Sun and Afya go up and down completely randomly.

Pair Corralation between Golden Sun and Afya

Given the investment horizon of 90 days Golden Sun Education is expected to under-perform the Afya. In addition to that, Golden Sun is 4.04 times more volatile than Afya. It trades about -0.12 of its total potential returns per unit of risk. Afya is currently generating about -0.07 per unit of volatility. If you would invest  1,706  in Afya on September 26, 2024 and sell it today you would lose (149.00) from holding Afya or give up 8.73% of portfolio value over 90 days.

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

Golden Sun Education  vs.  Afya

Golden Sun Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Sun Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 inconsistent 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 Golden Sun and Afya

The main advantage of trading using opposite Golden Sun and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Sun 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 Golden Sun Education 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.