Correlation Between Afya and Tesla
Can any of the company-specific risk be diversified away by investing in both Afya and Tesla 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 Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Tesla Inc, you can compare the effects of market volatilities on Afya and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Tesla.
Diversification Opportunities for Afya and Tesla
Excellent diversification
The 3 months correlation between Afya and Tesla is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Afya and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Afya i.e., Afya and Tesla go up and down completely randomly.
Pair Corralation between Afya and Tesla
Given the investment horizon of 90 days Afya is expected to generate 0.49 times more return on investment than Tesla. However, Afya is 2.04 times less risky than Tesla. It trades about 0.17 of its potential returns per unit of risk. Tesla Inc is currently generating about -0.33 per unit of risk. If you would invest 1,495 in Afya on December 11, 2024 and sell it today you would earn a total of 202.00 from holding Afya or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. Tesla Inc
Performance |
| Timeline |
| Afya |
| Tesla Inc |
Afya and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Tesla
The main advantage of trading using opposite Afya and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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