Correlation Between Afya and AerSale Corp
Can any of the company-specific risk be diversified away by investing in both Afya and AerSale Corp 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 AerSale Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and AerSale Corp, you can compare the effects of market volatilities on Afya and AerSale Corp 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 AerSale Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and AerSale Corp.
Diversification Opportunities for Afya and AerSale Corp
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Afya and AerSale is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Afya and AerSale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerSale Corp 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 AerSale Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerSale Corp has no effect on the direction of Afya i.e., Afya and AerSale Corp go up and down completely randomly.
Pair Corralation between Afya and AerSale Corp
Given the investment horizon of 90 days Afya is expected to under-perform the AerSale Corp. But the stock apears to be less risky and, when comparing its historical volatility, Afya is 1.27 times less risky than AerSale Corp. The stock trades about -0.18 of its potential returns per unit of risk. The AerSale Corp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 542.00 in AerSale Corp on September 3, 2024 and sell it today you would earn a total of 88.00 from holding AerSale Corp or generate 16.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. AerSale Corp
Performance |
| Timeline |
| Afya |
| AerSale Corp |
Afya and AerSale Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and AerSale Corp
The main advantage of trading using opposite Afya and AerSale Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, AerSale Corp 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 AerSale Corp will offset losses from the drop in AerSale Corp's long position.| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
| AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Corporacion America Airports | AerSale Corp vs. Aeroports de Paris |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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