Correlation Between Afya and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Afya and Analog Devices 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 Afya and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Analog Devices, you can compare the effects of market volatilities on Afya and Analog Devices 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 Afya with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Analog Devices.
Diversification Opportunities for Afya and Analog Devices
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Afya and Analog is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Afya 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 Afya are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Afya i.e., Afya and Analog Devices go up and down completely randomly.
Pair Corralation between Afya and Analog Devices
Given the investment horizon of 90 days Afya is expected to under-perform the Analog Devices. In addition to that, Afya is 1.27 times more volatile than Analog Devices. It trades about -0.18 of its total potential returns per unit of risk. Analog Devices is currently generating about -0.02 per unit of volatility. If you would invest 21,862 in Analog Devices on September 13, 2024 and sell it today you would lose (196.50) from holding Analog Devices or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. Analog Devices
Performance |
| Timeline |
| Afya |
| Analog Devices |
Afya and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Analog Devices
The main advantage of trading using opposite Afya and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
| Analog Devices vs. ON Semiconductor | Analog Devices vs. Monolithic Power Systems | Analog Devices vs. Globalfoundries | Analog Devices vs. Wisekey International Holding |
Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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