Correlation Between MQGAU and Afya

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

By analyzing existing cross correlation between MQGAU 5491 09 NOV 33 and Afya, you can compare the effects of market volatilities on MQGAU 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 MQGAU with a short position of Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of MQGAU and Afya.

Diversification Opportunities for MQGAU and Afya

-0.49

Correlation Coefficient

MQGAU  Afya

Very good diversification

The 3 months correlation between MQGAU and Afya is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding MQGAU 5491 09 NOV 33 and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and MQGAU 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 MQGAU 5491 09 NOV 33 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 MQGAU i.e., MQGAU and Afya go up and down completely randomly.

Pair Corralation between MQGAU and Afya

Assuming the 90 days trading horizon MQGAU 5491 09 NOV 33 is expected to under-perform the Afya. But the bond apears to be less risky and, when comparing its historical volatility, MQGAU 5491 09 NOV 33 is 2.35 times less risky than Afya. The bond trades about -0.01 of its potential returns per unit of risk. The Afya is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,550  in Afya on December 22, 2024 and sell it today you would earn a total of  243.00  from holding Afya or generate 15.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	36.67%
Values	Daily Returns

MQGAU 5491 09 NOV 33  vs.  Afya

MQGAU 5491 09

Risk-Adjusted Performance

Solid

Over the last 90 days MQGAU 5491 09 NOV 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MQGAU is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Afya

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Afya are ranked lower than 8 (%) 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 MQGAU and Afya

The main advantage of trading using opposite MQGAU and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MQGAU 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 MQGAU 5491 09 NOV 33 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.