Correlation Between Afya and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Afya and Cheniere Energy 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 Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Cheniere Energy Partners, you can compare the effects of market volatilities on Afya and Cheniere Energy 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 Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Cheniere Energy.
Diversification Opportunities for Afya and Cheniere Energy
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Afya and Cheniere is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Afya i.e., Afya and Cheniere Energy go up and down completely randomly.
Pair Corralation between Afya and Cheniere Energy
Given the investment horizon of 90 days Afya is expected to generate 1.35 times more return on investment than Cheniere Energy. However, Afya is 1.35 times more volatile than Cheniere Energy Partners. It trades about 0.05 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.06 per unit of risk. If you would invest 1,242 in Afya on August 27, 2024 and sell it today you would earn a total of 432.00 from holding Afya or generate 34.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. Cheniere Energy Partners
Performance |
| Timeline |
| Afya |
| Cheniere Energy Partners |
Afya and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Cheniere Energy
The main advantage of trading using opposite Afya and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.| Afya vs. American Public Education | Afya vs. Lincoln Educational Services | Afya vs. Adtalem Global Education |
| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Hess Midstream Partners |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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