Correlation Between Lincoln Educational and China Liberal
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and China Liberal 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 Lincoln Educational and China Liberal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln Educational Services and China Liberal Education, you can compare the effects of market volatilities on Lincoln Educational and China Liberal 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 Lincoln Educational with a short position of China Liberal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and China Liberal.
Diversification Opportunities for Lincoln Educational and China Liberal
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lincoln and China is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and China Liberal Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Liberal Education and Lincoln Educational 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 Lincoln Educational Services are associated (or correlated) with China Liberal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Liberal Education has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and China Liberal go up and down completely randomly.
Pair Corralation between Lincoln Educational and China Liberal
Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 1.13 times more return on investment than China Liberal. However, Lincoln Educational is 1.13 times more volatile than China Liberal Education. It trades about 0.3 of its potential returns per unit of risk. China Liberal Education is currently generating about -0.31 per unit of risk. If you would invest 1,338 in Lincoln Educational Services on August 31, 2024 and sell it today you would earn a total of 311.00 from holding Lincoln Educational Services or generate 23.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Educational Services vs. China Liberal Education
Performance |
| Timeline |
| Lincoln Educational |
| China Liberal Education |
Lincoln Educational and China Liberal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and China Liberal
The main advantage of trading using opposite Lincoln Educational and China Liberal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, China Liberal 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 China Liberal will offset losses from the drop in China Liberal's long position.| Lincoln Educational vs. Vasta Platform | Lincoln Educational vs. Laureate Education | Lincoln Educational vs. American Public Education | Lincoln Educational vs. Adtalem Global Education |
| China Liberal vs. Lixiang Education Holding | China Liberal vs. Four Seasons Education | China Liberal vs. Jianzhi Education Technology | China Liberal 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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