Correlation Between Afya and Allient
Can any of the company-specific risk be diversified away by investing in both Afya and Allient 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 Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Allient, you can compare the effects of market volatilities on Afya and Allient 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 Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Allient.
Diversification Opportunities for Afya and Allient
Very good diversification
The 3 months correlation between Afya and Allient is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Afya i.e., Afya and Allient go up and down completely randomly.
Pair Corralation between Afya and Allient
Given the investment horizon of 90 days Afya is expected to generate 0.71 times more return on investment than Allient. However, Afya is 1.4 times less risky than Allient. It trades about 0.01 of its potential returns per unit of risk. Allient is currently generating about -0.02 per unit of risk. If you would invest 1,573 in Afya on September 12, 2024 and sell it today you would earn a total of 32.00 from holding Afya or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. Allient
Performance |
| Timeline |
| Afya |
| Allient |
Afya and Allient Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Allient
The main advantage of trading using opposite Afya and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Allient 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 Allient will offset losses from the drop in Allient's long position.| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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