Correlation Between CHINA EDUCATION and Vale SA
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and Vale SA 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 Vale SA 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 Vale SA, you can compare the effects of market volatilities on CHINA EDUCATION and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and Vale SA.
Diversification Opportunities for CHINA EDUCATION and Vale SA
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CHINA and Vale is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and Vale SA go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and Vale SA
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 2.27 times more return on investment than Vale SA. However, CHINA EDUCATION is 2.27 times more volatile than Vale SA. It trades about 0.02 of its potential returns per unit of risk. Vale SA is currently generating about -0.04 per unit of risk. If you would invest 37.00 in CHINA EDUCATION GROUP on October 13, 2024 and sell it today you would earn a total of 2.00 from holding CHINA EDUCATION GROUP or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. Vale SA
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| Vale SA |
CHINA EDUCATION and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and Vale SA
The main advantage of trading using opposite CHINA EDUCATION and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.| CHINA EDUCATION vs. Brockhaus Capital Management | CHINA EDUCATION vs. Ares Management Corp | CHINA EDUCATION vs. TITAN MACHINERY | CHINA EDUCATION vs. Sims Metal Management |
| Vale SA vs. American Public Education | Vale SA vs. MAGIC SOFTWARE ENTR | Vale SA vs. CHINA EDUCATION GROUP | Vale SA vs. IDP EDUCATION LTD |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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