Correlation Between Rave Restaurant and Afya
Can any of the company-specific risk be diversified away by investing in both Rave Restaurant 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 Rave Restaurant and Afya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rave Restaurant Group and Afya, you can compare the effects of market volatilities on Rave Restaurant 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 Rave Restaurant with a short position of Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and Afya.
Diversification Opportunities for Rave Restaurant and Afya
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rave and Afya is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Rave Restaurant 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 Rave Restaurant Group 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 Rave Restaurant i.e., Rave Restaurant and Afya go up and down completely randomly.
Pair Corralation between Rave Restaurant and Afya
Given the investment horizon of 90 days Rave Restaurant Group is expected to under-perform the Afya. In addition to that, Rave Restaurant is 1.37 times more volatile than Afya. It trades about -0.05 of its total potential returns per unit of risk. Afya is currently generating about 0.12 per unit of volatility. If you would invest 1,524 in Afya on October 20, 2024 and sell it today you would earn a total of 50.00 from holding Afya or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rave Restaurant Group vs. Afya
Performance |
| Timeline |
| Rave Restaurant Group |
| Afya |
Rave Restaurant and Afya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rave Restaurant and Afya
The main advantage of trading using opposite Rave Restaurant and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant 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.| Rave Restaurant vs. Ark Restaurants Corp | Rave Restaurant vs. One Group Hospitality | Rave Restaurant vs. Flanigans Enterprises | Rave Restaurant vs. Noble Romans |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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