Correlation Between China Liberal and Elite Education

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

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

Diversification Opportunities for China Liberal and Elite Education

0.75

Correlation Coefficient

China Liberal  Elite Education

Poor diversification

The 3 months correlation between China and Elite is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Liberal Education and Elite Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Education Group and China Liberal 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 China Liberal Education are associated (or correlated) with Elite Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Education Group has no effect on the direction of China Liberal i.e., China Liberal and Elite Education go up and down completely randomly.

Pair Corralation between China Liberal and Elite Education

Given the investment horizon of 90 days China Liberal is expected to generate 20.78 times less return on investment than Elite Education. In addition to that, China Liberal is 1.51 times more volatile than Elite Education Group. It trades about 0.01 of its total potential returns per unit of risk. Elite Education Group is currently generating about 0.16 per unit of volatility. If you would invest  83.00  in Elite Education Group on February 24, 2024 and sell it today you would earn a total of  12.00  from holding Elite Education Group or generate 14.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

China Liberal Education  vs.  Elite Education Group

China Liberal Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Liberal Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Elite Education Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elite Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Elite Education is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with China Liberal and Elite Education

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

The idea behind China Liberal Education and Elite 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.