Correlation Between Afya and American Public

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Can any of the company-specific risk be diversified away by investing in both Afya and American Public 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 American Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya Ltd Cl and American Public Education, you can compare the effects of market volatilities on Afya and American Public 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 American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and American Public.

Diversification Opportunities for Afya and American Public

-0.92
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Afya and American is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Afya Ltd Cl and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education 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 Ltd Cl are associated (or correlated) with American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of Afya i.e., Afya and American Public go up and down completely randomly.

Pair Corralation between Afya and American Public

Given the investment horizon of 90 days Afya Ltd Cl is expected to generate 0.53 times more return on investment than American Public. However, Afya Ltd Cl is 1.88 times less risky than American Public. It trades about 0.34 of its potential returns per unit of risk. American Public Education is currently generating about 0.08 per unit of risk. If you would invest  1,282  in Afya Ltd Cl on July 6, 2022 and sell it today you would earn a total of  234.00  from holding Afya Ltd Cl or generate 18.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Afya Ltd Cl  vs.  American Public Education

 Performance (%) 
       Timeline  
Afya Ltd Cl 
Afya Performance
23 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Afya Ltd Cl are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Afya sustained solid returns over the last few months and may actually be approaching a breakup point.

Afya Price Channel

American Public Education 
American Performance
0 of 100
Over the last 90 days American Public Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

American Price Channel

Afya and American Public Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Afya and American Public

The main advantage of trading using opposite Afya and American Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, American Public 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 American Public will offset losses from the drop in American Public's long position.
Afya vs. Vroom Inc
The idea behind Afya Ltd Cl and American Public Education 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.
American Public vs. Vroom Inc
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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