Correlation Between Gap and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Gap and CHINA EDUCATION 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 Gap and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Gap and CHINA EDUCATION 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 Gap with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap and CHINA EDUCATION.
Diversification Opportunities for Gap and CHINA EDUCATION
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gap and CHINA is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Gap and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and Gap 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 The Gap are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Gap i.e., Gap and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Gap and CHINA EDUCATION
Assuming the 90 days trading horizon The Gap is expected to generate 0.89 times more return on investment than CHINA EDUCATION. However, The Gap is 1.12 times less risky than CHINA EDUCATION. It trades about 0.17 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about -0.21 per unit of risk. If you would invest 2,077 in The Gap on September 13, 2024 and sell it today you would earn a total of 330.00 from holding The Gap or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Gap vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| Gap |
| CHINA EDUCATION GROUP |
Gap and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap and CHINA EDUCATION
The main advantage of trading using opposite Gap and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap position performs unexpectedly, CHINA EDUCATION 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 EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| Gap vs. CHINA EDUCATION GROUP | Gap vs. HK Electric Investments | Gap vs. TAL Education Group | Gap vs. Postal Savings Bank |
| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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