Correlation Between Grand Canyon and Gaotu Techedu
Can any of the company-specific risk be diversified away by investing in both Grand Canyon and Gaotu Techedu 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 Grand Canyon and Gaotu Techedu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and Gaotu Techedu DRC, you can compare the effects of market volatilities on Grand Canyon and Gaotu Techedu 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 Grand Canyon with a short position of Gaotu Techedu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and Gaotu Techedu.
Diversification Opportunities for Grand Canyon and Gaotu Techedu
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grand and Gaotu is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Gaotu Techedu DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaotu Techedu DRC and Grand Canyon 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 Grand Canyon Education are associated (or correlated) with Gaotu Techedu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaotu Techedu DRC has no effect on the direction of Grand Canyon i.e., Grand Canyon and Gaotu Techedu go up and down completely randomly.
Pair Corralation between Grand Canyon and Gaotu Techedu
Given the investment horizon of 90 days Grand Canyon is expected to generate 3.38 times less return on investment than Gaotu Techedu. But when comparing it to its historical volatility, Grand Canyon Education is 4.05 times less risky than Gaotu Techedu. It trades about 0.06 of its potential returns per unit of risk. Gaotu Techedu DRC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 141.00 in Gaotu Techedu DRC on August 24, 2024 and sell it today you would earn a total of 120.00 from holding Gaotu Techedu DRC or generate 85.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. Gaotu Techedu DRC
Performance |
| Timeline |
| Grand Canyon Education |
| Gaotu Techedu DRC |
Grand Canyon and Gaotu Techedu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and Gaotu Techedu
The main advantage of trading using opposite Grand Canyon and Gaotu Techedu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon position performs unexpectedly, Gaotu Techedu 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 Gaotu Techedu will offset losses from the drop in Gaotu Techedu's long position.| Grand Canyon vs. Gaotu Techedu DRC | Grand Canyon vs. TAL Education Group | Grand Canyon vs. Strategic Education | Grand Canyon vs. Vasta Platform |
| Gaotu Techedu vs. TAL Education Group | Gaotu Techedu vs. Strategic Education | Gaotu Techedu vs. Vasta Platform | Gaotu Techedu vs. Afya |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |