Correlation Between Afya and MOSAIC

Can any of the company-specific risk be diversified away by investing in both Afya and MOSAIC 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 MOSAIC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Afya and MOSAIC NEW 4875, you can compare the effects of market volatilities on Afya and MOSAIC 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 MOSAIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and MOSAIC.

Diversification Opportunities for Afya and MOSAIC

0.32

Correlation Coefficient

Afya  MOSAIC

Weak diversification

The 3 months correlation between Afya and MOSAIC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Afya and MOSAIC NEW 4875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOSAIC NEW 4875 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 MOSAIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOSAIC NEW 4875 has no effect on the direction of Afya i.e., Afya and MOSAIC go up and down completely randomly.

Pair Corralation between Afya and MOSAIC

Given the investment horizon of 90 days Afya is expected to under-perform the MOSAIC. But the stock apears to be less risky and, when comparing its historical volatility, Afya is 1.1 times less risky than MOSAIC. The stock trades about -0.17 of its potential returns per unit of risk. The MOSAIC NEW 4875 is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  8,905  in MOSAIC NEW 4875 on September 13, 2024 and sell it today you would lose (141.00) from holding MOSAIC NEW 4875 or give up 1.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.14%
Values	Daily Returns

Afya  vs.  MOSAIC NEW 4875

Afya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Afya is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

MOSAIC NEW 4875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MOSAIC NEW 4875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for MOSAIC NEW 4875 investors.

Pair Trading with Afya and MOSAIC

The main advantage of trading using opposite Afya and MOSAIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, MOSAIC 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 MOSAIC will offset losses from the drop in MOSAIC's long position.

The idea behind Afya and MOSAIC NEW 4875 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.