Correlation Between China Liberal and CIBT Education
Can any of the company-specific risk be diversified away by investing in both China Liberal and CIBT Education 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 CIBT Education 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 CIBT Education Group, you can compare the effects of market volatilities on China Liberal and CIBT Education 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 CIBT Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Liberal and CIBT Education.
Diversification Opportunities for China Liberal and CIBT Education
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and CIBT is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Liberal Education and CIBT Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBT Education 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 CIBT Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBT Education Group has no effect on the direction of China Liberal i.e., China Liberal and CIBT Education go up and down completely randomly.
Pair Corralation between China Liberal and CIBT Education
Given the investment horizon of 90 days China Liberal Education is expected to generate 0.15 times more return on investment than CIBT Education. However, China Liberal Education is 6.81 times less risky than CIBT Education. It trades about -0.23 of its potential returns per unit of risk. CIBT Education Group is currently generating about -0.11 per unit of risk. If you would invest 24.00 in China Liberal Education on September 2, 2024 and sell it today you would lose (3.00) from holding China Liberal Education or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Liberal Education vs. CIBT Education Group
Performance |
| Timeline |
| China Liberal Education |
| CIBT Education Group |
China Liberal and CIBT Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Liberal and CIBT Education
The main advantage of trading using opposite China Liberal and CIBT Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Liberal position performs unexpectedly, CIBT Education 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 CIBT Education will offset losses from the drop in CIBT Education's long position.| China Liberal vs. American Public Education | China Liberal vs. ATA Creativity Global | China Liberal vs. Cogna Educacao SA | China Liberal vs. Adtalem Global Education |
| CIBT Education vs. ATA Creativity Global | CIBT Education vs. American Public Education | CIBT Education vs. Skillful Craftsman Education | CIBT Education vs. China Liberal 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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