Correlation Between Toro and Afya

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

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

Diversification Opportunities for Toro and Afya

-0.57

Correlation Coefficient

Toro  Afya

Excellent diversification

The 3 months correlation between Toro and Afya is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Toro and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Toro 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 Toro 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 Toro i.e., Toro and Afya go up and down completely randomly.

Pair Corralation between Toro and Afya

Given the investment horizon of 90 days Toro is expected to under-perform the Afya. In addition to that, Toro is 1.01 times more volatile than Afya. It trades about -0.14 of its total potential returns per unit of risk. Afya is currently generating about 0.13 per unit of volatility. If you would invest  1,513  in Afya on December 17, 2024 and sell it today you would earn a total of  290.00  from holding Afya or generate 19.17% return on investment over 90 days.

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

Toro  vs.  Afya

Toro

Risk-Adjusted Performance

Very Weak

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

Afya

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Afya are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Afya sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toro and Afya

The main advantage of trading using opposite Toro and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toro 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 Toro 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.