Correlation Between NH Foods and Afya
Can any of the company-specific risk be diversified away by investing in both NH Foods 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 NH Foods and Afya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Foods Ltd and Afya, you can compare the effects of market volatilities on NH Foods 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 NH Foods with a short position of Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and Afya.
Diversification Opportunities for NH Foods and Afya
Pay attention - limited upside
The 3 months correlation between NIPMY and Afya is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and NH Foods 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 NH Foods Ltd 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 NH Foods i.e., NH Foods and Afya go up and down completely randomly.
Pair Corralation between NH Foods and Afya
Assuming the 90 days horizon NH Foods is expected to generate 2.61 times less return on investment than Afya. But when comparing it to its historical volatility, NH Foods Ltd is 4.69 times less risky than Afya. It trades about 0.07 of its potential returns per unit of risk. Afya is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,284 in Afya on August 31, 2024 and sell it today you would earn a total of 339.00 from holding Afya or generate 26.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
NH Foods Ltd vs. Afya
Performance |
| Timeline |
| NH Foods |
| Afya |
NH Foods and Afya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and Afya
The main advantage of trading using opposite NH Foods and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods 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.| NH Foods vs. The A2 Milk | NH Foods vs. Altavoz Entertainment | NH Foods vs. Artisan Consumer Goods | NH Foods vs. General Mills |
| Afya vs. Lincoln Educational Services | Afya vs. Aquagold International | Afya vs. Thrivent High Yield | Afya vs. Morningstar Unconstrained Allocation |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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