Correlation Between Laureate Education and YAOKO CO
Can any of the company-specific risk be diversified away by investing in both Laureate Education and YAOKO CO 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 Laureate Education and YAOKO CO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and YAOKO LTD, you can compare the effects of market volatilities on Laureate Education and YAOKO CO 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 Laureate Education with a short position of YAOKO CO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and YAOKO CO.
Diversification Opportunities for Laureate Education and YAOKO CO
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Laureate and YAOKO is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and YAOKO LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAOKO LTD and Laureate Education 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 Laureate Education are associated (or correlated) with YAOKO CO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAOKO LTD has no effect on the direction of Laureate Education i.e., Laureate Education and YAOKO CO go up and down completely randomly.
Pair Corralation between Laureate Education and YAOKO CO
Assuming the 90 days trading horizon Laureate Education is expected to generate 0.97 times more return on investment than YAOKO CO. However, Laureate Education is 1.03 times less risky than YAOKO CO. It trades about 0.03 of its potential returns per unit of risk. YAOKO LTD is currently generating about -0.08 per unit of risk. If you would invest 1,790 in Laureate Education on October 15, 2024 and sell it today you would earn a total of 10.00 from holding Laureate Education or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. YAOKO LTD
Performance |
| Timeline |
| Laureate Education |
| YAOKO LTD |
Laureate Education and YAOKO CO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and YAOKO CO
The main advantage of trading using opposite Laureate Education and YAOKO CO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, YAOKO CO 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 YAOKO CO will offset losses from the drop in YAOKO CO's long position.| Laureate Education vs. IDP EDUCATION LTD | Laureate Education vs. Strategic Education | Laureate Education vs. Superior Plus Corp | Laureate Education vs. NMI Holdings |
| YAOKO CO vs. Check Point Software | YAOKO CO vs. Yanzhou Coal Mining | YAOKO CO vs. Aya Gold Silver | YAOKO CO vs. VITEC SOFTWARE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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