Correlation Between Wah Fu and Genius
Can any of the company-specific risk be diversified away by investing in both Wah Fu and Genius 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 Wah Fu and Genius into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Fu Education and Genius Group, you can compare the effects of market volatilities on Wah Fu and Genius 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 Wah Fu with a short position of Genius. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Fu and Genius.
Diversification Opportunities for Wah Fu and Genius
Good diversification
The 3 months correlation between Wah and Genius is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wah Fu Education and Genius Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Group and Wah Fu 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 Wah Fu Education are associated (or correlated) with Genius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Group has no effect on the direction of Wah Fu i.e., Wah Fu and Genius go up and down completely randomly.
Pair Corralation between Wah Fu and Genius
Given the investment horizon of 90 days Wah Fu is expected to generate 9.66 times less return on investment than Genius. But when comparing it to its historical volatility, Wah Fu Education is 4.45 times less risky than Genius. It trades about 0.01 of its potential returns per unit of risk. Genius Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Genius Group on February 22, 2024 and sell it today you would lose (4.00) from holding Genius Group or give up 11.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Wah Fu Education vs. Genius Group
Performance |
Timeline |
Wah Fu Education |
Genius Group |
Wah Fu and Genius Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wah Fu and Genius
The main advantage of trading using opposite Wah Fu and Genius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Fu position performs unexpectedly, Genius 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 Genius will offset losses from the drop in Genius' long position.Wah Fu vs. Four Seasons Education | Wah Fu vs. Sunlands Technology Group | Wah Fu vs. 51Talk Online Education | Wah Fu vs. Golden Sun Education |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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