Correlation Between CHINA EDUCATION and Sanoma Oyj
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and Sanoma Oyj 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 Sanoma Oyj 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 Sanoma Oyj, you can compare the effects of market volatilities on CHINA EDUCATION and Sanoma Oyj 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 Sanoma Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and Sanoma Oyj.
Diversification Opportunities for CHINA EDUCATION and Sanoma Oyj
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and Sanoma is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and Sanoma Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanoma Oyj 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 Sanoma Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanoma Oyj has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and Sanoma Oyj go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and Sanoma Oyj
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 2.49 times more return on investment than Sanoma Oyj. However, CHINA EDUCATION is 2.49 times more volatile than Sanoma Oyj. It trades about 0.04 of its potential returns per unit of risk. Sanoma Oyj is currently generating about -0.02 per unit of risk. If you would invest 24.00 in CHINA EDUCATION GROUP on September 2, 2024 and sell it today you would earn a total of 17.00 from holding CHINA EDUCATION GROUP or generate 70.83% 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. Sanoma Oyj
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| Sanoma Oyj |
CHINA EDUCATION and Sanoma Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and Sanoma Oyj
The main advantage of trading using opposite CHINA EDUCATION and Sanoma Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, Sanoma Oyj 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 Sanoma Oyj will offset losses from the drop in Sanoma Oyj's long position.| CHINA EDUCATION vs. DICKS Sporting Goods | CHINA EDUCATION vs. NTG Nordic Transport | CHINA EDUCATION vs. Fukuyama Transporting Co | CHINA EDUCATION vs. Sporttotal AG |
| Sanoma Oyj vs. DeVry Education Group | Sanoma Oyj vs. Jupiter Fund Management | Sanoma Oyj vs. CAREER EDUCATION | Sanoma Oyj vs. CHINA EDUCATION GROUP |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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