Correlation Between Afya and Laureate Education
Can any of the company-specific risk be diversified away by investing in both Afya and Laureate 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 Laureate Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Laureate Education, you can compare the effects of market volatilities on Afya and Laureate 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Laureate Education.
Diversification Opportunities for Afya and Laureate Education
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Afya and Laureate is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of Afya i.e., Afya and Laureate Education go up and down completely randomly.
Pair Corralation between Afya and Laureate Education
Given the investment horizon of 90 days Afya is expected to under-perform the Laureate Education. But the stock apears to be less risky and, when comparing its historical volatility, Afya is 1.23 times less risky than Laureate Education. The stock trades about -0.06 of its potential returns per unit of risk. The Laureate Education is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,572 in Laureate Education on August 24, 2024 and sell it today you would earn a total of 355.00 from holding Laureate Education or generate 22.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. Laureate Education
Performance |
| Timeline |
| Afya |
| Laureate Education |
Afya and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Laureate Education
The main advantage of trading using opposite Afya and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Laureate 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
| Laureate Education vs. Universal Technical Institute | Laureate Education vs. Strategic Education | Laureate Education vs. Grand Canyon Education | Laureate 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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