Correlation Between Ambow Education and Adtalem Global
Can any of the company-specific risk be diversified away by investing in both Ambow Education and Adtalem Global 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 Ambow Education and Adtalem Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambow Education Holding and Adtalem Global Education, you can compare the effects of market volatilities on Ambow Education and Adtalem Global 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 Ambow Education with a short position of Adtalem Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambow Education and Adtalem Global.
Diversification Opportunities for Ambow Education and Adtalem Global
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ambow and Adtalem is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education and Ambow 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 Ambow Education Holding are associated (or correlated) with Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of Ambow Education i.e., Ambow Education and Adtalem Global go up and down completely randomly.
Pair Corralation between Ambow Education and Adtalem Global
Given the investment horizon of 90 days Ambow Education Holding is expected to under-perform the Adtalem Global. In addition to that, Ambow Education is 1.76 times more volatile than Adtalem Global Education. It trades about -0.11 of its total potential returns per unit of risk. Adtalem Global Education is currently generating about 0.34 per unit of volatility. If you would invest 7,333 in Adtalem Global Education on August 27, 2024 and sell it today you would earn a total of 1,824 from holding Adtalem Global Education or generate 24.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambow Education Holding vs. Adtalem Global Education
Performance |
| Timeline |
| Ambow Education Holding |
| Adtalem Global Education |
Ambow Education and Adtalem Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambow Education and Adtalem Global
The main advantage of trading using opposite Ambow Education and Adtalem Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambow Education position performs unexpectedly, Adtalem Global 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 Adtalem Global will offset losses from the drop in Adtalem Global's long position.| Ambow Education vs. Vasta Platform | Ambow Education vs. Sunlands Technology Group | Ambow Education vs. Cogna Educacao SA | Ambow Education vs. American Public Education |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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