Correlation Between China Liberal and Puxin
Can any of the company-specific risk be diversified away by investing in both China Liberal and Puxin 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 Puxin 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 Puxin Limited, you can compare the effects of market volatilities on China Liberal and Puxin 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 Puxin. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Liberal and Puxin.
Diversification Opportunities for China Liberal and Puxin
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Puxin is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding China Liberal Education and Puxin Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puxin Limited 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 Puxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puxin Limited has no effect on the direction of China Liberal i.e., China Liberal and Puxin go up and down completely randomly.
Pair Corralation between China Liberal and Puxin
Given the investment horizon of 90 days China Liberal Education is expected to under-perform the Puxin. But the stock apears to be less risky and, when comparing its historical volatility, China Liberal Education is 1.74 times less risky than Puxin. The stock trades about -0.03 of its potential returns per unit of risk. The Puxin Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1.10 in Puxin Limited on August 31, 2024 and sell it today you would earn a total of 0.60 from holding Puxin Limited or generate 54.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 4.61% |
Values | Daily Returns |
China Liberal Education vs. Puxin Limited
Performance |
Timeline |
China Liberal Education |
Puxin Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Liberal and Puxin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Liberal and Puxin
The main advantage of trading using opposite China Liberal and Puxin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Liberal position performs unexpectedly, Puxin 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 Puxin will offset losses from the drop in Puxin's long position.China Liberal vs. Lixiang Education Holding | China Liberal vs. Four Seasons Education | China Liberal vs. Jianzhi Education Technology | China Liberal vs. Elite Education Group |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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