Correlation Between Krispy Kreme and Gaotu Techedu
Can any of the company-specific risk be diversified away by investing in both Krispy Kreme and Gaotu Techedu 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 Krispy Kreme and Gaotu Techedu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krispy Kreme and Gaotu Techedu DRC, you can compare the effects of market volatilities on Krispy Kreme and Gaotu Techedu 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 Krispy Kreme with a short position of Gaotu Techedu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krispy Kreme and Gaotu Techedu.
Diversification Opportunities for Krispy Kreme and Gaotu Techedu
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Krispy and Gaotu is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and Gaotu Techedu DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaotu Techedu DRC and Krispy Kreme 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 Krispy Kreme are associated (or correlated) with Gaotu Techedu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaotu Techedu DRC has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and Gaotu Techedu go up and down completely randomly.
Pair Corralation between Krispy Kreme and Gaotu Techedu
Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the Gaotu Techedu. But the stock apears to be less risky and, when comparing its historical volatility, Krispy Kreme is 2.13 times less risky than Gaotu Techedu. The stock trades about -0.01 of its potential returns per unit of risk. The Gaotu Techedu DRC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 141.00 in Gaotu Techedu DRC on August 24, 2024 and sell it today you would earn a total of 120.00 from holding Gaotu Techedu DRC or generate 85.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krispy Kreme vs. Gaotu Techedu DRC
Performance |
| Timeline |
| Krispy Kreme |
| Gaotu Techedu DRC |
Krispy Kreme and Gaotu Techedu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krispy Kreme and Gaotu Techedu
The main advantage of trading using opposite Krispy Kreme and Gaotu Techedu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme position performs unexpectedly, Gaotu Techedu 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 Gaotu Techedu will offset losses from the drop in Gaotu Techedu's long position.| Krispy Kreme vs. Sendas Distribuidora SA | Krispy Kreme vs. Natural Grocers by | Krispy Kreme vs. Sprouts Farmers Market | Krispy Kreme vs. Albertsons Companies |
| Gaotu Techedu vs. TAL Education Group | Gaotu Techedu vs. Strategic Education | Gaotu Techedu vs. Vasta Platform | Gaotu Techedu vs. Afya |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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