Correlation Between American Public and Four Seasons
Can any of the company-specific risk be diversified away by investing in both American Public and Four Seasons 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 Four Seasons 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 Four Seasons Education, you can compare the effects of market volatilities on American Public and Four Seasons 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 Four Seasons. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Four Seasons.
Diversification Opportunities for American Public and Four Seasons
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Four is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education 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 Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of American Public i.e., American Public and Four Seasons go up and down completely randomly.
Pair Corralation between American Public and Four Seasons
Given the investment horizon of 90 days American Public Education is expected to generate 2.05 times more return on investment than Four Seasons. However, American Public is 2.05 times more volatile than Four Seasons Education. It trades about 0.32 of its potential returns per unit of risk. Four Seasons Education is currently generating about -0.29 per unit of risk. If you would invest 1,562 in American Public Education on August 31, 2024 and sell it today you would earn a total of 493.00 from holding American Public Education or generate 31.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. Four Seasons Education
Performance |
| Timeline |
| American Public Education |
| Four Seasons Education |
American Public and Four Seasons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and Four Seasons
The main advantage of trading using opposite American Public and Four Seasons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, Four Seasons 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 Four Seasons will offset losses from the drop in Four Seasons' long position.| American Public vs. Laureate Education | American Public vs. Afya | American Public vs. Strategic Education | American Public vs. Stride Inc |
| Four Seasons vs. Wah Fu Education | Four Seasons vs. Sunlands Technology Group | Four Seasons vs. 51Talk Online Education | Four Seasons vs. China Liberal 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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