Correlation Between Laureate Education and Afya
Can any of the company-specific risk be diversified away by investing in both Laureate Education and Afya 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 Laureate Education and Afya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and Afya, you can compare the effects of market volatilities on Laureate Education and Afya 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 Laureate Education with a short position of Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and Afya.
Diversification Opportunities for Laureate Education and Afya
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Laureate and Afya is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Laureate Education 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 Laureate Education are associated (or correlated) with Afya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afya has no effect on the direction of Laureate Education i.e., Laureate Education and Afya go up and down completely randomly.
Pair Corralation between Laureate Education and Afya
Given the investment horizon of 90 days Laureate Education is expected to generate 1.23 times more return on investment than Afya. However, Laureate Education is 1.23 times more volatile than Afya. It trades about 0.37 of its potential returns per unit of risk. Afya is currently generating about -0.06 per unit of risk. 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 |
Laureate Education vs. Afya
Performance |
| Timeline |
| Laureate Education |
| Afya |
Laureate Education and Afya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and Afya
The main advantage of trading using opposite Laureate Education and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, Afya 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 Afya will offset losses from the drop in Afya's long position.| Laureate Education vs. Universal Technical Institute | Laureate Education vs. Strategic Education | Laureate Education vs. Grand Canyon Education | Laureate Education vs. American Public Education |
| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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