Correlation Between Lavoro Limited and Afya
Can any of the company-specific risk be diversified away by investing in both Lavoro Limited 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 Lavoro Limited and Afya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lavoro Limited Warrant and Afya, you can compare the effects of market volatilities on Lavoro Limited 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 Lavoro Limited with a short position of Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lavoro Limited and Afya.
Diversification Opportunities for Lavoro Limited and Afya
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lavoro and Afya is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lavoro Limited Warrant and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Lavoro Limited 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 Lavoro Limited Warrant 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 Lavoro Limited i.e., Lavoro Limited and Afya go up and down completely randomly.
Pair Corralation between Lavoro Limited and Afya
Assuming the 90 days horizon Lavoro Limited is expected to generate 1.38 times less return on investment than Afya. In addition to that, Lavoro Limited is 4.2 times more volatile than Afya. It trades about 0.01 of its total potential returns per unit of risk. Afya is currently generating about 0.07 per unit of volatility. If you would invest 1,646 in Afya on November 29, 2024 and sell it today you would earn a total of 53.00 from holding Afya or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.27% |
| Values | Daily Returns |
Lavoro Limited Warrant vs. Afya
Performance |
| Timeline |
| Lavoro Limited Warrant |
| Afya |
Lavoro Limited and Afya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lavoro Limited and Afya
The main advantage of trading using opposite Lavoro Limited and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lavoro Limited 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.| Lavoro Limited vs. Noble plc | Lavoro Limited vs. Delek Drilling | Lavoro Limited vs. Pembina Pipeline | Lavoro Limited vs. Zhihu Inc ADR |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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