Correlation Between Gaotu Techedu and First High
Can any of the company-specific risk be diversified away by investing in both Gaotu Techedu and First High 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 Gaotu Techedu and First High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaotu Techedu DRC and First High School Education, you can compare the effects of market volatilities on Gaotu Techedu and First High 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 Gaotu Techedu with a short position of First High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaotu Techedu and First High.
Diversification Opportunities for Gaotu Techedu and First High
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gaotu and First is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gaotu Techedu DRC and First High School Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First High School and Gaotu Techedu 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 Gaotu Techedu DRC are associated (or correlated) with First High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First High School has no effect on the direction of Gaotu Techedu i.e., Gaotu Techedu and First High go up and down completely randomly.
Pair Corralation between Gaotu Techedu and First High
Given the investment horizon of 90 days Gaotu Techedu is expected to generate 10.42 times less return on investment than First High. But when comparing it to its historical volatility, Gaotu Techedu DRC is 3.5 times less risky than First High. It trades about 0.05 of its potential returns per unit of risk. First High School Education is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 12.00 in First High School Education on August 28, 2024 and sell it today you would earn a total of 7.00 from holding First High School Education or generate 58.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.69% |
| Values | Daily Returns |
Gaotu Techedu DRC vs. First High School Education
Performance |
| Timeline |
| Gaotu Techedu DRC |
| First High School |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Gaotu Techedu and First High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaotu Techedu and First High
The main advantage of trading using opposite Gaotu Techedu and First High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaotu Techedu position performs unexpectedly, First High 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 First High will offset losses from the drop in First High's long position.| Gaotu Techedu vs. TAL Education Group | Gaotu Techedu vs. 17 Education Technology | Gaotu Techedu vs. New Oriental Education | Gaotu Techedu vs. RLX Technology |
| First High vs. Gaotu Techedu DRC | First High vs. New Oriental Education | First High vs. Sunlands Technology Group | First High vs. Ihuman 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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