Correlation Between Delek Logistics and Afya

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

By analyzing existing cross correlation between Delek Logistics Partners and Afya, you can compare the effects of market volatilities on Delek Logistics 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 Delek Logistics with a short position of Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Logistics and Afya.

Diversification Opportunities for Delek Logistics and Afya

-0.07

Correlation Coefficient

Delek Logistics  Afya

Good diversification

The 3 months correlation between Delek and Afya is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Delek Logistics 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 Delek Logistics Partners 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 Delek Logistics i.e., Delek Logistics and Afya go up and down completely randomly.

Pair Corralation between Delek Logistics and Afya

Considering the 90-day investment horizon Delek Logistics Partners is expected to under-perform the Afya. But the stock apears to be less risky and, when comparing its historical volatility, Delek Logistics Partners is 1.04 times less risky than Afya. The stock trades about -0.04 of its potential returns per unit of risk. The Afya is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,650  in Afya on September 16, 2024 and sell it today you would lose (86.00) from holding Afya or give up 5.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Delek Logistics Partners  vs.  Afya

Delek Logistics Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Logistics Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delek Logistics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with Delek Logistics and Afya

The main advantage of trading using opposite Delek Logistics and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Logistics 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.

The idea behind Delek Logistics Partners and Afya 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.