Correlation Between Afya and Elite Education
Can any of the company-specific risk be diversified away by investing in both Afya and Elite Education 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 Elite Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Elite Education Group, you can compare the effects of market volatilities on Afya and Elite Education 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 Elite Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Elite Education.
Diversification Opportunities for Afya and Elite Education
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Afya and Elite is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Elite Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Education Group 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 Elite Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Education Group has no effect on the direction of Afya i.e., Afya and Elite Education go up and down completely randomly.
Pair Corralation between Afya and Elite Education
Given the investment horizon of 90 days Afya is expected to generate 165.33 times less return on investment than Elite Education. But when comparing it to its historical volatility, Afya is 1.92 times less risky than Elite Education. It trades about 0.0 of its potential returns per unit of risk. Elite Education Group is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 77.00 in Elite Education Group on August 30, 2024 and sell it today you would earn a total of 26.00 from holding Elite Education Group or generate 33.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Afya vs. Elite Education Group
Performance |
| Timeline |
| Afya |
| Elite Education Group |
Afya and Elite Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Elite Education
The main advantage of trading using opposite Afya and Elite Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Elite Education 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 Elite Education will offset losses from the drop in Elite Education's long position.| Afya vs. Laureate Education | Afya vs. Strategic Education | Afya vs. Grand Canyon Education | Afya vs. American Public Education |
| Elite Education vs. Laureate Education | Elite Education vs. Strategic Education | Elite Education vs. Grand Canyon Education | Elite Education vs. American Public 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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