Correlation Between Kellanova and Afya

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

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

Diversification Opportunities for Kellanova and Afya

-0.59

Correlation Coefficient

Kellanova  Afya

Excellent diversification

The 3 months correlation between Kellanova and Afya is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Kellanova 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 Kellanova 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 Kellanova i.e., Kellanova and Afya go up and down completely randomly.

Pair Corralation between Kellanova and Afya

Taking into account the 90-day investment horizon Kellanova is expected to generate 3.77 times less return on investment than Afya. But when comparing it to its historical volatility, Kellanova is 7.79 times less risky than Afya. It trades about 0.21 of its potential returns per unit of risk. Afya is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,591  in Afya on October 27, 2024 and sell it today you would earn a total of  46.00  from holding Afya or generate 2.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kellanova  vs.  Afya

Kellanova

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kellanova is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional 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 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 Kellanova and Afya

The main advantage of trading using opposite Kellanova and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova 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 Kellanova 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.