Correlation Between Afya and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Afya and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and BBB Foods, you can compare the effects of market volatilities on Afya and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and BBB Foods.
Diversification Opportunities for Afya and BBB Foods
Very weak diversification
The 3 months correlation between Afya and BBB is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Afya and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Afya i.e., Afya and BBB Foods go up and down completely randomly.
Pair Corralation between Afya and BBB Foods
Given the investment horizon of 90 days Afya is expected to generate 0.79 times more return on investment than BBB Foods. However, Afya is 1.27 times less risky than BBB Foods. It trades about 0.23 of its potential returns per unit of risk. BBB Foods is currently generating about 0.14 per unit of risk. If you would invest 1,500 in Afya on November 4, 2024 and sell it today you would earn a total of 115.00 from holding Afya or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. BBB Foods
Performance |
| Timeline |
| Afya |
| BBB Foods |
Afya and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and BBB Foods
The main advantage of trading using opposite Afya and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
| BBB Foods vs. Radcom | BBB Foods vs. Snap On | BBB Foods vs. Space Communication | BBB Foods vs. Procter Gamble |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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