Correlation Between Afya and Deluxe
Can any of the company-specific risk be diversified away by investing in both Afya and Deluxe 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 Deluxe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Deluxe, you can compare the effects of market volatilities on Afya and Deluxe 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 Deluxe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Deluxe.
Diversification Opportunities for Afya and Deluxe
Very good diversification
The 3 months correlation between Afya and Deluxe is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe 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 Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of Afya i.e., Afya and Deluxe go up and down completely randomly.
Pair Corralation between Afya and Deluxe
Given the investment horizon of 90 days Afya is expected to generate 0.95 times more return on investment than Deluxe. However, Afya is 1.06 times less risky than Deluxe. It trades about 0.12 of its potential returns per unit of risk. Deluxe is currently generating about 0.02 per unit of risk. If you would invest 1,524 in Afya on October 20, 2024 and sell it today you would earn a total of 50.00 from holding Afya or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. Deluxe
Performance |
| Timeline |
| Afya |
| Deluxe |
Afya and Deluxe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Deluxe
The main advantage of trading using opposite Afya and Deluxe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Deluxe 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 Deluxe will offset losses from the drop in Deluxe's long position.| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
| Deluxe vs. Criteo Sa | Deluxe vs. Emerald Expositions Events | Deluxe vs. Marchex | Deluxe vs. Integral Ad Science |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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