Correlation Between G8 EDUCATION and Xinhua Winshare
Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and Xinhua Winshare 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 G8 EDUCATION and Xinhua Winshare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 EDUCATION and Xinhua Winshare Publishing, you can compare the effects of market volatilities on G8 EDUCATION and Xinhua Winshare 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 G8 EDUCATION with a short position of Xinhua Winshare. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and Xinhua Winshare.
Diversification Opportunities for G8 EDUCATION and Xinhua Winshare
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 3EAG and Xinhua is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and Xinhua Winshare Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinhua Winshare Publ and G8 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 G8 EDUCATION are associated (or correlated) with Xinhua Winshare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinhua Winshare Publ has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and Xinhua Winshare go up and down completely randomly.
Pair Corralation between G8 EDUCATION and Xinhua Winshare
Assuming the 90 days trading horizon G8 EDUCATION is expected to generate 1.04 times more return on investment than Xinhua Winshare. However, G8 EDUCATION is 1.04 times more volatile than Xinhua Winshare Publishing. It trades about 0.14 of its potential returns per unit of risk. Xinhua Winshare Publishing is currently generating about 0.03 per unit of risk. If you would invest 78.00 in G8 EDUCATION on August 31, 2024 and sell it today you would earn a total of 4.00 from holding G8 EDUCATION or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 EDUCATION vs. Xinhua Winshare Publishing
Performance |
| Timeline |
| G8 EDUCATION |
| Xinhua Winshare Publ |
G8 EDUCATION and Xinhua Winshare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 EDUCATION and Xinhua Winshare
The main advantage of trading using opposite G8 EDUCATION and Xinhua Winshare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, Xinhua Winshare 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 Xinhua Winshare will offset losses from the drop in Xinhua Winshare's long position.| G8 EDUCATION vs. MCEWEN MINING INC | G8 EDUCATION vs. ADRIATIC METALS LS 013355 | G8 EDUCATION vs. Genco Shipping Trading | G8 EDUCATION vs. CapitaLand Investment Limited |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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