Correlation Between Adtalem Global and Wah Fu
Can any of the company-specific risk be diversified away by investing in both Adtalem Global 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 Adtalem Global and Wah Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adtalem Global Education and Wah Fu Education, you can compare the effects of market volatilities on Adtalem Global 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 Adtalem Global with a short position of Wah Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and Wah Fu.
Diversification Opportunities for Adtalem Global and Wah Fu
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adtalem and Wah is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education 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 Adtalem Global 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 Adtalem Global Education 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 Adtalem Global i.e., Adtalem Global and Wah Fu go up and down completely randomly.
Pair Corralation between Adtalem Global and Wah Fu
Given the investment horizon of 90 days Adtalem Global Education is expected to generate 0.64 times more return on investment than Wah Fu. However, Adtalem Global Education is 1.56 times less risky than Wah Fu. It trades about 0.08 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 3,946 in Adtalem Global Education on August 24, 2024 and sell it today you would earn a total of 4,936 from holding Adtalem Global Education or generate 125.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adtalem Global Education vs. Wah Fu Education
Performance |
| Timeline |
| Adtalem Global Education |
| Wah Fu Education |
Adtalem Global and Wah Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adtalem Global and Wah Fu
The main advantage of trading using opposite Adtalem Global and Wah Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global 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.| Adtalem Global vs. Grand Canyon Education | Adtalem Global vs. Afya | Adtalem Global vs. Bright Scholar Education | Adtalem Global vs. Laureate Education |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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