Correlation Between Gaotu Techedu and Lixiang Education
Can any of the company-specific risk be diversified away by investing in both Gaotu Techedu and Lixiang 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 Gaotu Techedu and Lixiang Education 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 Lixiang Education Holding, you can compare the effects of market volatilities on Gaotu Techedu and Lixiang 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 Gaotu Techedu with a short position of Lixiang Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaotu Techedu and Lixiang Education.
Diversification Opportunities for Gaotu Techedu and Lixiang Education
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gaotu and Lixiang is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gaotu Techedu DRC and Lixiang Education Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixiang Education Holding 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 Lixiang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixiang Education Holding has no effect on the direction of Gaotu Techedu i.e., Gaotu Techedu and Lixiang Education go up and down completely randomly.
Pair Corralation between Gaotu Techedu and Lixiang Education
Given the investment horizon of 90 days Gaotu Techedu DRC is expected to generate 0.58 times more return on investment than Lixiang Education. However, Gaotu Techedu DRC is 1.72 times less risky than Lixiang Education. It trades about 0.02 of its potential returns per unit of risk. Lixiang Education Holding is currently generating about 0.0 per unit of risk. If you would invest 329.00 in Gaotu Techedu DRC on August 31, 2024 and sell it today you would lose (42.00) from holding Gaotu Techedu DRC or give up 12.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaotu Techedu DRC vs. Lixiang Education Holding
Performance |
| Timeline |
| Gaotu Techedu DRC |
| Lixiang Education Holding |
Gaotu Techedu and Lixiang Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaotu Techedu and Lixiang Education
The main advantage of trading using opposite Gaotu Techedu and Lixiang Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaotu Techedu position performs unexpectedly, Lixiang 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 Lixiang Education will offset losses from the drop in Lixiang Education'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 |
| Lixiang Education vs. China Liberal Education | Lixiang Education vs. Four Seasons Education | Lixiang Education vs. Jianzhi Education Technology | Lixiang Education vs. Elite Education Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |