Correlation Between Ambow Education and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both Ambow Education and Grand Canyon 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 Grand Canyon 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 Grand Canyon Education, you can compare the effects of market volatilities on Ambow Education and Grand Canyon 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 Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambow Education and Grand Canyon.
Diversification Opportunities for Ambow Education and Grand Canyon
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ambow and Grand is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of Ambow Education i.e., Ambow Education and Grand Canyon go up and down completely randomly.
Pair Corralation between Ambow Education and Grand Canyon
Given the investment horizon of 90 days Ambow Education Holding is expected to generate 8.57 times more return on investment than Grand Canyon. However, Ambow Education is 8.57 times more volatile than Grand Canyon Education. It trades about 0.03 of its potential returns per unit of risk. Grand Canyon Education is currently generating about 0.06 per unit of risk. If you would invest 315.00 in Ambow Education Holding on August 24, 2024 and sell it today you would lose (168.00) from holding Ambow Education Holding or give up 53.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambow Education Holding vs. Grand Canyon Education
Performance |
| Timeline |
| Ambow Education Holding |
| Grand Canyon Education |
Ambow Education and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambow Education and Grand Canyon
The main advantage of trading using opposite Ambow Education and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambow Education position performs unexpectedly, Grand Canyon 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 Grand Canyon will offset losses from the drop in Grand Canyon's long position.| Ambow Education vs. TAL Education Group | Ambow Education vs. Strategic Education | Ambow Education vs. Vasta Platform | Ambow Education vs. Afya |
| Grand Canyon vs. TAL Education Group | Grand Canyon vs. Strategic Education | Grand Canyon vs. Vasta Platform | Grand Canyon vs. Afya |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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