Correlation Between Afya and Albertsons Companies

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Afya and Albertsons Companies 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 Albertsons Companies 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 Albertsons Companies, you can compare the effects of market volatilities on Afya and Albertsons Companies 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 Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Albertsons Companies.

Diversification Opportunities for Afya and Albertsons Companies

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Afya and Albertsons is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Afya Ltd Cl and Albertsons Companies Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies 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 Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Afya i.e., Afya and Albertsons Companies go up and down completely randomly.

Pair Corralation between Afya and Albertsons Companies

Given the investment horizon of 90 days Afya Ltd Cl is expected to generate 0.79 times more return on investment than Albertsons Companies. However, Afya Ltd Cl is 1.26 times less risky than Albertsons Companies. It trades about 0.17 of its potential returns per unit of risk. Albertsons Companies is currently generating about -0.15 per unit of risk. If you would invest  1,298  in Afya Ltd Cl on July 1, 2022 and sell it today you would earn a total of  83.00  from holding Afya Ltd Cl or generate 6.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Afya Ltd Cl  vs.  Albertsons Companies Inc

 Performance (%) 
       Timeline  
Afya Ltd Cl 
Afya Performance
16 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Afya Ltd Cl are ranked lower than 16 (%) 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

Albertsons Companies 
Albertsons Performance
0 of 100
Over the last 90 days Albertsons Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Afya and Albertsons Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Afya and Albertsons Companies

The main advantage of trading using opposite Afya and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.
Afya vs. Vroom Inc
The idea behind Afya Ltd Cl and Albertsons Companies 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Albertsons Companies as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Albertsons Companies' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Albertsons Companies' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Albertsons Companies.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

Other Complementary Tools

Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go