Correlation Between CHINA EDUCATION and Gap
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and Gap 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 Gap 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 The Gap, you can compare the effects of market volatilities on CHINA EDUCATION and Gap 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 Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and Gap.
Diversification Opportunities for CHINA EDUCATION and Gap
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CHINA and Gap is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap 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 Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and Gap go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and Gap
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 1.56 times more return on investment than Gap. However, CHINA EDUCATION is 1.56 times more volatile than The Gap. It trades about 0.07 of its potential returns per unit of risk. The Gap is currently generating about 0.04 per unit of risk. If you would invest 24.00 in CHINA EDUCATION GROUP on September 14, 2024 and sell it today you would earn a total of 21.00 from holding CHINA EDUCATION GROUP or generate 87.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. The Gap
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| Gap |
CHINA EDUCATION and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and Gap
The main advantage of trading using opposite CHINA EDUCATION and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, Gap 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 Gap will offset losses from the drop in Gap's long position.| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |