Correlation Between Afya and Mannatech Incorporated
Can any of the company-specific risk be diversified away by investing in both Afya and Mannatech Incorporated 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 Mannatech Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Mannatech Incorporated, you can compare the effects of market volatilities on Afya and Mannatech Incorporated 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 Mannatech Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Mannatech Incorporated.
Diversification Opportunities for Afya and Mannatech Incorporated
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Afya and Mannatech is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Mannatech Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mannatech Incorporated 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 Mannatech Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mannatech Incorporated has no effect on the direction of Afya i.e., Afya and Mannatech Incorporated go up and down completely randomly.
Pair Corralation between Afya and Mannatech Incorporated
Given the investment horizon of 90 days Afya is expected to generate 0.45 times more return on investment than Mannatech Incorporated. However, Afya is 2.23 times less risky than Mannatech Incorporated. It trades about 0.03 of its potential returns per unit of risk. Mannatech Incorporated is currently generating about -0.03 per unit of risk. If you would invest 1,673 in Afya on August 27, 2024 and sell it today you would earn a total of 13.00 from holding Afya or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Afya vs. Mannatech Incorporated
Performance |
| Timeline |
| Afya |
| Mannatech Incorporated |
Afya and Mannatech Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Mannatech Incorporated
The main advantage of trading using opposite Afya and Mannatech Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Mannatech Incorporated 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 Mannatech Incorporated will offset losses from the drop in Mannatech Incorporated's long position.| Afya vs. American Public Education | Afya vs. Lincoln Educational Services | Afya vs. Adtalem Global 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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