Correlation Between China Liberal and Genius
Can any of the company-specific risk be diversified away by investing in both China Liberal and Genius 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 Liberal and Genius into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Liberal Education and Genius Group, you can compare the effects of market volatilities on China Liberal and Genius 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 Liberal with a short position of Genius. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Liberal and Genius.
Diversification Opportunities for China Liberal and Genius
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Genius is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding China Liberal Education and Genius Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Group and China Liberal 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 Liberal Education are associated (or correlated) with Genius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Group has no effect on the direction of China Liberal i.e., China Liberal and Genius go up and down completely randomly.
Pair Corralation between China Liberal and Genius
Given the investment horizon of 90 days China Liberal Education is expected to under-perform the Genius. But the stock apears to be less risky and, when comparing its historical volatility, China Liberal Education is 5.81 times less risky than Genius. The stock trades about -0.34 of its potential returns per unit of risk. The Genius Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Genius Group on August 28, 2024 and sell it today you would earn a total of 13.00 from holding Genius Group or generate 18.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Liberal Education vs. Genius Group
Performance |
| Timeline |
| China Liberal Education |
| Genius Group |
China Liberal and Genius Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Liberal and Genius
The main advantage of trading using opposite China Liberal and Genius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Liberal position performs unexpectedly, Genius 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 Genius will offset losses from the drop in Genius' long position.| China Liberal vs. American Public Education | China Liberal vs. Lincoln Educational Services | China Liberal vs. Adtalem Global Education |
| Genius vs. American Public Education | Genius vs. Lincoln Educational Services | Genius vs. Adtalem Global 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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