Correlation Between TAL Education and Afya

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

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

Diversification Opportunities for TAL Education and Afya

-0.02

Correlation Coefficient

TAL Education  Afya

Good diversification

The 3 months correlation between TAL and Afya is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and TAL Education 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 TAL Education Group 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 TAL Education i.e., TAL Education and Afya go up and down completely randomly.

Pair Corralation between TAL Education and Afya

Considering the 90-day investment horizon TAL Education Group is expected to under-perform the Afya. In addition to that, TAL Education is 1.79 times more volatile than Afya. It trades about -0.08 of its total potential returns per unit of risk. Afya is currently generating about 0.09 per unit of volatility. If you would invest  1,640  in Afya on January 25, 2025 and sell it today you would earn a total of  200.00  from holding Afya or generate 12.2% return on investment over 90 days.

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

TAL Education Group  vs.  Afya

TAL Education Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days TAL Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Afya

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Afya are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Afya sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TAL Education and Afya

The main advantage of trading using opposite TAL Education and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education 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 TAL Education Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.