Correlation Between Lincoln Educational and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and Yuexiu Transport 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 Yuexiu Transport 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 Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on Lincoln Educational and Yuexiu Transport 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 Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and Yuexiu Transport.
Diversification Opportunities for Lincoln Educational and Yuexiu Transport
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lincoln and Yuexiu is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf 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 Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Yuexiu Transport go up and down completely randomly.
Pair Corralation between Lincoln Educational and Yuexiu Transport
Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 0.67 times more return on investment than Yuexiu Transport. However, Lincoln Educational Services is 1.49 times less risky than Yuexiu Transport. It trades about 0.28 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.16 per unit of risk. If you would invest 1,194 in Lincoln Educational Services on August 30, 2024 and sell it today you would earn a total of 455.00 from holding Lincoln Educational Services or generate 38.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Lincoln Educational Services vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| Lincoln Educational |
| Yuexiu Transport Inf |
Lincoln Educational and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and Yuexiu Transport
The main advantage of trading using opposite Lincoln Educational and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, Yuexiu Transport 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 Yuexiu Transport will offset losses from the drop in Yuexiu Transport's long position.| Lincoln Educational vs. Laureate Education | Lincoln Educational vs. Strategic Education | Lincoln Educational vs. Grand Canyon Education | Lincoln Educational vs. American Public Education |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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