Correlation Between Laureate Education and Schibsted ASA
Can any of the company-specific risk be diversified away by investing in both Laureate Education and Schibsted ASA 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 Schibsted ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and Schibsted ASA A, you can compare the effects of market volatilities on Laureate Education and Schibsted ASA 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 Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and Schibsted ASA.
Diversification Opportunities for Laureate Education and Schibsted ASA
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Laureate and Schibsted is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and Schibsted ASA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA A 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 Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA A has no effect on the direction of Laureate Education i.e., Laureate Education and Schibsted ASA go up and down completely randomly.
Pair Corralation between Laureate Education and Schibsted ASA
Assuming the 90 days trading horizon Laureate Education is expected to generate 1.54 times more return on investment than Schibsted ASA. However, Laureate Education is 1.54 times more volatile than Schibsted ASA A. It trades about 0.18 of its potential returns per unit of risk. Schibsted ASA A is currently generating about -0.34 per unit of risk. If you would invest 1,750 in Laureate Education on October 22, 2024 and sell it today you would earn a total of 70.00 from holding Laureate Education or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. Schibsted ASA A
Performance |
| Timeline |
| Laureate Education |
| Schibsted ASA A |
Laureate Education and Schibsted ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and Schibsted ASA
The main advantage of trading using opposite Laureate Education and Schibsted ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, Schibsted ASA 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 Schibsted ASA will offset losses from the drop in Schibsted ASA's long position.| Laureate Education vs. PNC Financial Services | Laureate Education vs. Preferred Bank | Laureate Education vs. Easy Software AG | Laureate Education vs. BioNTech SE |
| Schibsted ASA vs. TAL Education Group | Schibsted ASA vs. Adtalem Global Education | Schibsted ASA vs. Forsys Metals Corp | Schibsted ASA vs. Laureate Education |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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