Correlation Between Graham Holdings and Wah Fu

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Can any of the company-specific risk be diversified away by investing in both Graham Holdings and Wah Fu 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 Graham Holdings and Wah Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graham Holdings Co and Wah Fu Education, you can compare the effects of market volatilities on Graham Holdings and Wah Fu 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 Graham Holdings with a short position of Wah Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and Wah Fu.

Diversification Opportunities for Graham Holdings and Wah Fu

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Graham and Wah is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and Wah Fu Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Fu Education and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with Wah Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Fu Education has no effect on the direction of Graham Holdings i.e., Graham Holdings and Wah Fu go up and down completely randomly.

Pair Corralation between Graham Holdings and Wah Fu

Considering the 90-day investment horizon Graham Holdings Co is expected to generate 1.22 times more return on investment than Wah Fu. However, Graham Holdings is 1.22 times more volatile than Wah Fu Education. It trades about 0.25 of its potential returns per unit of risk. Wah Fu Education is currently generating about -0.18 per unit of risk. If you would invest  78,025  in Graham Holdings Co on August 24, 2024 and sell it today you would earn a total of  13,780  from holding Graham Holdings Co or generate 17.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Graham Holdings Co  vs.  Wah Fu Education

 Performance 
       Timeline  
Graham Holdings 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Graham Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.
Wah Fu Education 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wah Fu Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Wah Fu is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Graham Holdings and Wah Fu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Graham Holdings and Wah Fu

The main advantage of trading using opposite Graham Holdings and Wah Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham Holdings position performs unexpectedly, Wah Fu 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 Wah Fu will offset losses from the drop in Wah Fu's long position.
The idea behind Graham Holdings Co and Wah Fu Education pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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