Correlation Between Ambow Education and Wah Fu
Can any of the company-specific risk be diversified away by investing in both Ambow Education and Wah Fu 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 Wah Fu 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 Wah Fu Education, you can compare the effects of market volatilities on Ambow Education and Wah Fu 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 Wah Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambow Education and Wah Fu.
Diversification Opportunities for Ambow Education and Wah Fu
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ambow and Wah is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding and Wah Fu Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Fu 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 Wah Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Fu Education has no effect on the direction of Ambow Education i.e., Ambow Education and Wah Fu go up and down completely randomly.
Pair Corralation between Ambow Education and Wah Fu
Given the investment horizon of 90 days Ambow Education Holding is expected to generate 3.61 times more return on investment than Wah Fu. However, Ambow Education is 3.61 times more volatile than Wah Fu Education. It trades about 0.03 of its potential returns per unit of risk. Wah Fu Education is currently generating about 0.01 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 (172.00) from holding Ambow Education Holding or give up 54.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambow Education Holding vs. Wah Fu Education
Performance |
| Timeline |
| Ambow Education Holding |
| Wah Fu Education |
Ambow Education and Wah Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambow Education and Wah Fu
The main advantage of trading using opposite Ambow Education and Wah Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambow Education position performs unexpectedly, Wah Fu 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 Wah Fu will offset losses from the drop in Wah Fu's long position.| Ambow Education vs. Gaotu Techedu DRC | Ambow Education vs. TAL Education Group | Ambow Education vs. Strategic Education | Ambow Education vs. Vasta Platform |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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