Correlation Between Grand Canyon and CHINA EAST
Can any of the company-specific risk be diversified away by investing in both Grand Canyon and CHINA EAST 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 Grand Canyon and CHINA EAST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and CHINA EAST ED, you can compare the effects of market volatilities on Grand Canyon and CHINA EAST 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 Grand Canyon with a short position of CHINA EAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and CHINA EAST.
Diversification Opportunities for Grand Canyon and CHINA EAST
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Grand and CHINA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and CHINA EAST ED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EAST ED and Grand Canyon 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 Grand Canyon Education are associated (or correlated) with CHINA EAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EAST ED has no effect on the direction of Grand Canyon i.e., Grand Canyon and CHINA EAST go up and down completely randomly.
Pair Corralation between Grand Canyon and CHINA EAST
Assuming the 90 days horizon Grand Canyon Education is expected to generate 0.93 times more return on investment than CHINA EAST. However, Grand Canyon Education is 1.08 times less risky than CHINA EAST. It trades about 0.2 of its potential returns per unit of risk. CHINA EAST ED is currently generating about -0.03 per unit of risk. If you would invest 12,000 in Grand Canyon Education on October 14, 2024 and sell it today you would earn a total of 3,600 from holding Grand Canyon Education or generate 30.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. CHINA EAST ED
Performance |
| Timeline |
| Grand Canyon Education |
| CHINA EAST ED |
Grand Canyon and CHINA EAST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and CHINA EAST
The main advantage of trading using opposite Grand Canyon and CHINA EAST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon position performs unexpectedly, CHINA EAST 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 EAST will offset losses from the drop in CHINA EAST's long position.| Grand Canyon vs. Citic Telecom International | Grand Canyon vs. ACCSYS TECHPLC EO | Grand Canyon vs. Kingdee International Software | Grand Canyon vs. Addtech AB |
| CHINA EAST vs. BJs Restaurants | CHINA EAST vs. HOCHSCHILD MINING | CHINA EAST vs. Luckin Coffee | CHINA EAST vs. GigaMedia |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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