Correlation Between Afya and SCE Trust
Can any of the company-specific risk be diversified away by investing in both Afya and SCE Trust 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 SCE Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and SCE Trust IV, you can compare the effects of market volatilities on Afya and SCE Trust 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 SCE Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and SCE Trust.
Diversification Opportunities for Afya and SCE Trust
Average diversification
The 3 months correlation between Afya and SCE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Afya and SCE Trust IV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCE Trust IV 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 SCE Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCE Trust IV has no effect on the direction of Afya i.e., Afya and SCE Trust go up and down completely randomly.
Pair Corralation between Afya and SCE Trust
Given the investment horizon of 90 days Afya is expected to under-perform the SCE Trust. In addition to that, Afya is 4.43 times more volatile than SCE Trust IV. It trades about -0.06 of its total potential returns per unit of risk. SCE Trust IV is currently generating about 0.08 per unit of volatility. If you would invest 2,454 in SCE Trust IV on August 24, 2024 and sell it today you would earn a total of 21.00 from holding SCE Trust IV or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. SCE Trust IV
Performance |
| Timeline |
| Afya |
| SCE Trust IV |
Afya and SCE Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and SCE Trust
The main advantage of trading using opposite Afya and SCE Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, SCE Trust 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 SCE Trust will offset losses from the drop in SCE Trust's long position.| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
| SCE Trust vs. Hafnia Limited | SCE Trust vs. Sun Country Airlines | SCE Trust vs. RCI Hospitality Holdings | SCE Trust vs. Afya |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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