Correlation Between 126307BB2 and Afya

Can any of the company-specific risk be diversified away by investing in both 126307BB2 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 126307BB2 and Afya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSC Holdings 4125 and Afya, you can compare the effects of market volatilities on 126307BB2 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 126307BB2 with a short position of Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of 126307BB2 and Afya.

Diversification Opportunities for 126307BB2 and Afya

0.22

Correlation Coefficient

126307BB2  Afya

Modest diversification

The 3 months correlation between 126307BB2 and Afya is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CSC Holdings 4125 and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and 126307BB2 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 CSC Holdings 4125 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 126307BB2 i.e., 126307BB2 and Afya go up and down completely randomly.

Pair Corralation between 126307BB2 and Afya

Assuming the 90 days trading horizon CSC Holdings 4125 is expected to generate 0.69 times more return on investment than Afya. However, CSC Holdings 4125 is 1.45 times less risky than Afya. It trades about -0.24 of its potential returns per unit of risk. Afya is currently generating about -0.18 per unit of risk. If you would invest  7,525  in CSC Holdings 4125 on September 13, 2024 and sell it today you would lose (460.00) from holding CSC Holdings 4125 or give up 6.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.27%
Values	Daily Returns

CSC Holdings 4125  vs.  Afya

CSC Holdings 4125

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSC Holdings 4125 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 126307BB2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 126307BB2 and Afya

The main advantage of trading using opposite 126307BB2 and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 126307BB2 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 CSC Holdings 4125 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.

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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.