Correlation Between DeVry Education and China Resources
Can any of the company-specific risk be diversified away by investing in both DeVry Education and China Resources 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 DeVry Education and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DeVry Education Group and China Resources Gas, you can compare the effects of market volatilities on DeVry Education and China Resources 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 DeVry Education with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of DeVry Education and China Resources.
Diversification Opportunities for DeVry Education and China Resources
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DeVry and China is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding DeVry Education Group and China Resources Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Gas and DeVry Education 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 DeVry Education Group are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Gas has no effect on the direction of DeVry Education i.e., DeVry Education and China Resources go up and down completely randomly.
Pair Corralation between DeVry Education and China Resources
Assuming the 90 days horizon DeVry Education Group is expected to generate 0.89 times more return on investment than China Resources. However, DeVry Education Group is 1.13 times less risky than China Resources. It trades about 0.1 of its potential returns per unit of risk. China Resources Gas is currently generating about 0.05 per unit of risk. If you would invest 7,250 in DeVry Education Group on October 26, 2024 and sell it today you would earn a total of 2,250 from holding DeVry Education Group or generate 31.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DeVry Education Group vs. China Resources Gas
Performance |
| Timeline |
| DeVry Education Group |
| China Resources Gas |
DeVry Education and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DeVry Education and China Resources
The main advantage of trading using opposite DeVry Education and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DeVry Education position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| DeVry Education vs. Apple Inc | DeVry Education vs. Apple Inc | DeVry Education vs. Apple Inc | DeVry Education vs. Apple Inc |
| China Resources vs. DICKS Sporting Goods | China Resources vs. EMBARK EDUCATION LTD | China Resources vs. DeVry Education Group | China Resources vs. SPORT LISBOA E |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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