Correlation Between CHINA EDUCATION and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and USWE SPORTS 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 CHINA EDUCATION and USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and USWE SPORTS AB, you can compare the effects of market volatilities on CHINA EDUCATION and USWE SPORTS 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 CHINA EDUCATION with a short position of USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and USWE SPORTS.
Diversification Opportunities for CHINA EDUCATION and USWE SPORTS
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and USWE is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB and CHINA 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 CHINA EDUCATION GROUP are associated (or correlated) with USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and USWE SPORTS go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and USWE SPORTS
Assuming the 90 days horizon CHINA EDUCATION is expected to generate 1.26 times less return on investment than USWE SPORTS. But when comparing it to its historical volatility, CHINA EDUCATION GROUP is 1.46 times less risky than USWE SPORTS. It trades about 0.17 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 75.00 in USWE SPORTS AB on November 8, 2024 and sell it today you would earn a total of 7.00 from holding USWE SPORTS AB or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. USWE SPORTS AB
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| USWE SPORTS AB |
CHINA EDUCATION and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and USWE SPORTS
The main advantage of trading using opposite CHINA EDUCATION and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| CHINA EDUCATION vs. Wyndham Hotels Resorts | CHINA EDUCATION vs. Treasury Wine Estates | CHINA EDUCATION vs. DALATA HOTEL | CHINA EDUCATION vs. INTERCONT HOTELS |
| USWE SPORTS vs. Transport International Holdings | USWE SPORTS vs. Penn National Gaming | USWE SPORTS vs. Fukuyama Transporting Co | USWE SPORTS vs. PLAYMATES TOYS |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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