Correlation Between Afya and Skillful Craftsman
Can any of the company-specific risk be diversified away by investing in both Afya and Skillful Craftsman 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 Skillful Craftsman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Skillful Craftsman Education, you can compare the effects of market volatilities on Afya and Skillful Craftsman 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 Skillful Craftsman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Skillful Craftsman.
Diversification Opportunities for Afya and Skillful Craftsman
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Afya and Skillful is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Skillful Craftsman Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skillful Craftsman 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 Skillful Craftsman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skillful Craftsman has no effect on the direction of Afya i.e., Afya and Skillful Craftsman go up and down completely randomly.
Pair Corralation between Afya and Skillful Craftsman
Given the investment horizon of 90 days Afya is expected to generate 0.71 times more return on investment than Skillful Craftsman. However, Afya is 1.4 times less risky than Skillful Craftsman. It trades about 0.09 of its potential returns per unit of risk. Skillful Craftsman Education is currently generating about -0.1 per unit of risk. If you would invest 1,563 in Afya on November 3, 2024 and sell it today you would earn a total of 51.00 from holding Afya or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. Skillful Craftsman Education
Performance |
| Timeline |
| Afya |
| Skillful Craftsman |
Afya and Skillful Craftsman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Skillful Craftsman
The main advantage of trading using opposite Afya and Skillful Craftsman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Skillful Craftsman 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 Skillful Craftsman will offset losses from the drop in Skillful Craftsman's long position.| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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