Correlation Between Black Box and Hailiang Education

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

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

Diversification Opportunities for Black Box and Hailiang Education

0.0

Correlation Coefficient

Black Box  Hailiang Education

Pay attention - limited upside

The 3 months correlation between Black and Hailiang is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Black Box Entertainment and Hailiang Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hailiang Education and Black Box 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 Black Box Entertainment are associated (or correlated) with Hailiang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hailiang Education has no effect on the direction of Black Box i.e., Black Box and Hailiang Education go up and down completely randomly.

Pair Corralation between Black Box and Hailiang Education

If you would invest  55.00  in Black Box Entertainment on January 30, 2024 and sell it today you would earn a total of  16.00  from holding Black Box Entertainment or generate 29.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Black Box Entertainment  vs.  Hailiang Education Group

Black Box Entertainment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Black Box Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Black Box exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hailiang Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hailiang Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Hailiang Education is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Black Box and Hailiang Education

The main advantage of trading using opposite Black Box and Hailiang Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Box position performs unexpectedly, Hailiang Education 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 Hailiang Education will offset losses from the drop in Hailiang Education's long position.

The idea behind Black Box Entertainment and Hailiang Education Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.