Correlation Between Ambow Education and American Public
Can any of the company-specific risk be diversified away by investing in both Ambow Education 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 Ambow Education and American Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambow Education Holding and American Public Education, you can compare the effects of market volatilities on Ambow Education 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 Ambow Education with a short position of American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambow Education and American Public.
Diversification Opportunities for Ambow Education and American Public
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ambow and American is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding 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 Ambow 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 Ambow Education Holding 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 Ambow Education i.e., Ambow Education and American Public go up and down completely randomly.
Pair Corralation between Ambow Education and American Public
Given the investment horizon of 90 days Ambow Education is expected to generate 9.15 times less return on investment than American Public. In addition to that, Ambow Education is 1.64 times more volatile than American Public Education. It trades about 0.02 of its total potential returns per unit of risk. American Public Education is currently generating about 0.26 per unit of volatility. If you would invest 1,329 in American Public Education on February 5, 2024 and sell it today you would earn a total of 179.00 from holding American Public Education or generate 13.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ambow Education Holding vs. American Public Education
Performance |
Timeline |
Ambow Education Holding |
American Public Education |
Ambow Education and American Public Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ambow Education and American Public
The main advantage of trading using opposite Ambow Education and American Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambow Education 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.Ambow Education vs. Vasta PlatformLtd | Ambow Education vs. Sunlands Technology Group | Ambow Education vs. Cogna Educacao SA | Ambow Education vs. American Public Education |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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