Correlation Between Afya and LB Foster
Can any of the company-specific risk be diversified away by investing in both Afya and LB Foster 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 LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and LB Foster, you can compare the effects of market volatilities on Afya and LB Foster 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 LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and LB Foster.
Diversification Opportunities for Afya and LB Foster
Very good diversification
The 3 months correlation between Afya and FSTR is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Afya and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster 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 LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Afya i.e., Afya and LB Foster go up and down completely randomly.
Pair Corralation between Afya and LB Foster
Given the investment horizon of 90 days Afya is expected to generate 20.18 times less return on investment than LB Foster. But when comparing it to its historical volatility, Afya is 1.58 times less risky than LB Foster. It trades about 0.02 of its potential returns per unit of risk. LB Foster is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,903 in LB Foster on September 11, 2024 and sell it today you would earn a total of 959.00 from holding LB Foster or generate 50.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Afya vs. LB Foster
Performance |
Timeline |
Afya |
LB Foster |
Afya and LB Foster Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Afya and LB Foster
The main advantage of trading using opposite Afya and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, LB Foster 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 LB Foster will offset losses from the drop in LB Foster's long position.Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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