Correlation Between Four Seasons and Gaotu Techedu
Can any of the company-specific risk be diversified away by investing in both Four Seasons 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 Four Seasons and Gaotu Techedu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Four Seasons Education and Gaotu Techedu DRC, you can compare the effects of market volatilities on Four Seasons 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 Four Seasons with a short position of Gaotu Techedu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Seasons and Gaotu Techedu.
Diversification Opportunities for Four Seasons and Gaotu Techedu
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Four and Gaotu is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education 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 Four Seasons 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 Four Seasons Education 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 Four Seasons i.e., Four Seasons and Gaotu Techedu go up and down completely randomly.
Pair Corralation between Four Seasons and Gaotu Techedu
Given the investment horizon of 90 days Four Seasons Education is expected to generate 0.74 times more return on investment than Gaotu Techedu. However, Four Seasons Education is 1.36 times less risky than Gaotu Techedu. It trades about -0.24 of its potential returns per unit of risk. Gaotu Techedu DRC is currently generating about -0.38 per unit of risk. If you would invest 1,209 in Four Seasons Education on August 28, 2024 and sell it today you would lose (118.00) from holding Four Seasons Education or give up 9.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Four Seasons Education vs. Gaotu Techedu DRC
Performance |
| Timeline |
| Four Seasons Education |
| Gaotu Techedu DRC |
Four Seasons and Gaotu Techedu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Four Seasons and Gaotu Techedu
The main advantage of trading using opposite Four Seasons and Gaotu Techedu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Seasons 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.| Four Seasons vs. American Public Education | Four Seasons vs. Lincoln Educational Services | Four Seasons vs. Adtalem Global Education |
| Gaotu Techedu vs. TAL Education Group | Gaotu Techedu vs. 17 Education Technology | Gaotu Techedu vs. New Oriental Education | Gaotu Techedu vs. RLX Technology |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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