Correlation Between Youdao and Santech Holdings
Can any of the company-specific risk be diversified away by investing in both Youdao and Santech Holdings 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 Youdao and Santech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Youdao Inc and Santech Holdings Limited, you can compare the effects of market volatilities on Youdao and Santech Holdings 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 Youdao with a short position of Santech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youdao and Santech Holdings.
Diversification Opportunities for Youdao and Santech Holdings
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Youdao and Santech is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Youdao Inc and Santech Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santech Holdings and Youdao 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 Youdao Inc are associated (or correlated) with Santech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santech Holdings has no effect on the direction of Youdao i.e., Youdao and Santech Holdings go up and down completely randomly.
Pair Corralation between Youdao and Santech Holdings
Considering the 90-day investment horizon Youdao Inc is expected to generate 0.35 times more return on investment than Santech Holdings. However, Youdao Inc is 2.82 times less risky than Santech Holdings. It trades about 0.19 of its potential returns per unit of risk. Santech Holdings Limited is currently generating about -0.06 per unit of risk. If you would invest 533.00 in Youdao Inc on November 8, 2024 and sell it today you would earn a total of 271.00 from holding Youdao Inc or generate 50.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youdao Inc vs. Santech Holdings Limited
Performance |
| Timeline |
| Youdao Inc |
| Santech Holdings |
Youdao and Santech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youdao and Santech Holdings
The main advantage of trading using opposite Youdao and Santech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youdao position performs unexpectedly, Santech Holdings 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 Santech Holdings will offset losses from the drop in Santech Holdings' long position.| Youdao vs. Gaotu Techedu DRC | Youdao vs. TAL Education Group | Youdao vs. Strategic Education | Youdao vs. Vasta Platform |
| Santech Holdings vs. Western Asset Investment | Santech Holdings vs. BorgWarner | Santech Holdings vs. FDG Electric Vehicles | Santech Holdings vs. Adient PLC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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