Correlation Between Lincoln Electric and Afya

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

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

Diversification Opportunities for Lincoln Electric and Afya

-0.92

Correlation Coefficient

Lincoln Electric  Afya

Pay attention - limited upside

The 3 months correlation between Lincoln and Afya is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Lincoln Electric 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 Lincoln Electric Holdings 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 Lincoln Electric i.e., Lincoln Electric and Afya go up and down completely randomly.

Pair Corralation between Lincoln Electric and Afya

Given the investment horizon of 90 days Lincoln Electric Holdings is expected to generate 1.03 times more return on investment than Afya. However, Lincoln Electric is 1.03 times more volatile than Afya. It trades about 0.28 of its potential returns per unit of risk. Afya is currently generating about -0.26 per unit of risk. If you would invest  18,083  in Lincoln Electric Holdings on May 7, 2025 and sell it today you would earn a total of  6,475  from holding Lincoln Electric Holdings or generate 35.81% return on investment over 90 days.

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

Lincoln Electric Holdings  vs.  Afya

Lincoln Electric Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Lincoln Electric displayed solid returns over the last few months and may actually be approaching a breakup point.

Afya

Risk-Adjusted Performance

Weakest

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

Pair Trading with Lincoln Electric and Afya

The main advantage of trading using opposite Lincoln Electric and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric 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 Lincoln Electric Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.