Correlation Between American Public and Qingdao Haier
Can any of the company-specific risk be diversified away by investing in both American Public and Qingdao Haier 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 American Public and Qingdao Haier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Public Education and Qingdao Haier Co, you can compare the effects of market volatilities on American Public and Qingdao Haier 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 American Public with a short position of Qingdao Haier. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Qingdao Haier.
Diversification Opportunities for American Public and Qingdao Haier
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Qingdao is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Qingdao Haier Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Haier and American Public 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 American Public Education are associated (or correlated) with Qingdao Haier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Haier has no effect on the direction of American Public i.e., American Public and Qingdao Haier go up and down completely randomly.
Pair Corralation between American Public and Qingdao Haier
Assuming the 90 days horizon American Public Education is expected to generate 0.99 times more return on investment than Qingdao Haier. However, American Public Education is 1.01 times less risky than Qingdao Haier. It trades about 0.26 of its potential returns per unit of risk. Qingdao Haier Co is currently generating about 0.06 per unit of risk. If you would invest 1,840 in American Public Education on September 14, 2024 and sell it today you would earn a total of 220.00 from holding American Public Education or generate 11.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. Qingdao Haier Co
Performance |
| Timeline |
| American Public Education |
| Qingdao Haier |
American Public and Qingdao Haier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and Qingdao Haier
The main advantage of trading using opposite American Public and Qingdao Haier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, Qingdao Haier 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 Qingdao Haier will offset losses from the drop in Qingdao Haier's long position.| American Public vs. IDP EDUCATION LTD | American Public vs. Strategic Education | American Public vs. Laureate Education | American Public vs. Superior Plus Corp |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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