Correlation Between Embark Education and Althea Group
Can any of the company-specific risk be diversified away by investing in both Embark Education and Althea Group 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 Embark Education and Althea Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embark Education Group and Althea Group Holdings, you can compare the effects of market volatilities on Embark Education and Althea Group 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 Embark Education with a short position of Althea Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Althea Group.
Diversification Opportunities for Embark Education and Althea Group
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Embark and Althea is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group and Althea Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Althea Group Holdings and Embark 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 Embark Education Group are associated (or correlated) with Althea Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Althea Group Holdings has no effect on the direction of Embark Education i.e., Embark Education and Althea Group go up and down completely randomly.
Pair Corralation between Embark Education and Althea Group
Assuming the 90 days trading horizon Embark Education Group is expected to generate 0.6 times more return on investment than Althea Group. However, Embark Education Group is 1.66 times less risky than Althea Group. It trades about 0.01 of its potential returns per unit of risk. Althea Group Holdings is currently generating about -0.33 per unit of risk. If you would invest 78.00 in Embark Education Group on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Embark Education Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embark Education Group vs. Althea Group Holdings
Performance |
| Timeline |
| Embark Education |
| Althea Group Holdings |
Embark Education and Althea Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and Althea Group
The main advantage of trading using opposite Embark Education and Althea Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education position performs unexpectedly, Althea Group 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 Althea Group will offset losses from the drop in Althea Group's long position.| Embark Education vs. MetalsGrove Mining | Embark Education vs. Dalaroo Metals | Embark Education vs. My Foodie Box | Embark Education vs. Step One Clothing |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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