Correlation Between Eagle Bulk and Afya

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

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

Diversification Opportunities for Eagle Bulk and Afya

-0.56

Correlation Coefficient

Eagle Bulk  Afya

Excellent diversification

The 3 months correlation between Eagle and Afya is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bulk Shipping and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Eagle Bulk 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 Eagle Bulk Shipping 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 Eagle Bulk i.e., Eagle Bulk and Afya go up and down completely randomly.

Pair Corralation between Eagle Bulk and Afya

Given the investment horizon of 90 days Eagle Bulk Shipping is expected to generate 0.71 times more return on investment than Afya. However, Eagle Bulk Shipping is 1.41 times less risky than Afya. It trades about 0.07 of its potential returns per unit of risk. Afya is currently generating about -0.42 per unit of risk. If you would invest  6,220  in Eagle Bulk Shipping on January 26, 2024 and sell it today you would earn a total of  40.00  from holding Eagle Bulk Shipping or generate 0.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	47.62%
Values	Daily Returns

Eagle Bulk Shipping  vs.  Afya

Eagle Bulk Shipping

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Eagle Bulk Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather conflicting essential indicators, Eagle Bulk exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Eagle Bulk and Afya

The main advantage of trading using opposite Eagle Bulk and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bulk 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 Eagle Bulk Shipping 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 Commodity Directory module to find actively traded commodities issued by global exchanges.