Correlation Between Gaotu Techedu and Vasta Platform

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Can any of the company-specific risk be diversified away by investing in both Gaotu Techedu and Vasta Platform 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 Vasta Platform 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 Vasta Platform, you can compare the effects of market volatilities on Gaotu Techedu and Vasta Platform 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 Vasta Platform. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaotu Techedu and Vasta Platform.

Diversification Opportunities for Gaotu Techedu and Vasta Platform

GaotuVastaDiversified AwayGaotuVastaDiversified Away100%
0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Gaotu and Vasta is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Gaotu Techedu DRC and Vasta Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vasta Platform 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 Vasta Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vasta Platform has no effect on the direction of Gaotu Techedu i.e., Gaotu Techedu and Vasta Platform go up and down completely randomly.

Pair Corralation between Gaotu Techedu and Vasta Platform

Given the investment horizon of 90 days Gaotu Techedu DRC is expected to under-perform the Vasta Platform. In addition to that, Gaotu Techedu is 1.73 times more volatile than Vasta Platform. It trades about -0.05 of its total potential returns per unit of risk. Vasta Platform is currently generating about -0.04 per unit of volatility. If you would invest  403.00  in Vasta Platform on November 21, 2024 and sell it today you would lose (124.00) from holding Vasta Platform or give up 30.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Gaotu Techedu DRC  vs.  Vasta Platform

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-10010
JavaScript chart by amCharts 3.21.15GOTU VSTA
       Timeline  
Gaotu Techedu DRC 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Gaotu Techedu DRC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Gaotu Techedu may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb22.22.42.62.83
Vasta Platform 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vasta Platform sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.61.822.22.42.62.83

Gaotu Techedu and Vasta Platform Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.27-5.45-3.62-1.79-0.031.743.545.347.158.95 0.0180.0200.0220.0240.026
JavaScript chart by amCharts 3.21.15GOTU VSTA
       Returns  

Pair Trading with Gaotu Techedu and Vasta Platform

The main advantage of trading using opposite Gaotu Techedu and Vasta Platform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaotu Techedu position performs unexpectedly, Vasta Platform 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 Vasta Platform will offset losses from the drop in Vasta Platform's long position.
The idea behind Gaotu Techedu DRC and Vasta Platform 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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