Correlation Between Lixiang Education and Youdao
Can any of the company-specific risk be diversified away by investing in both Lixiang Education and Youdao 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 Lixiang Education and Youdao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lixiang Education Holding and Youdao Inc, you can compare the effects of market volatilities on Lixiang Education and Youdao 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 Lixiang Education with a short position of Youdao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lixiang Education and Youdao.
Diversification Opportunities for Lixiang Education and Youdao
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lixiang and Youdao is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lixiang Education Holding and Youdao Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youdao Inc and Lixiang 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 Lixiang Education Holding are associated (or correlated) with Youdao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youdao Inc has no effect on the direction of Lixiang Education i.e., Lixiang Education and Youdao go up and down completely randomly.
Pair Corralation between Lixiang Education and Youdao
Given the investment horizon of 90 days Lixiang Education Holding is expected to generate 1.72 times more return on investment than Youdao. However, Lixiang Education is 1.72 times more volatile than Youdao Inc. It trades about 0.09 of its potential returns per unit of risk. Youdao Inc is currently generating about 0.13 per unit of risk. If you would invest 307.00 in Lixiang Education Holding on October 26, 2024 and sell it today you would earn a total of 198.00 from holding Lixiang Education Holding or generate 64.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Lixiang Education Holding vs. Youdao Inc
Performance |
| Timeline |
| Lixiang Education Holding |
| Youdao Inc |
Lixiang Education and Youdao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lixiang Education and Youdao
The main advantage of trading using opposite Lixiang Education and Youdao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lixiang Education position performs unexpectedly, Youdao 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 Youdao will offset losses from the drop in Youdao's long position.| Lixiang Education vs. China Liberal Education | Lixiang Education vs. Four Seasons Education | Lixiang Education vs. Jianzhi Education Technology | Lixiang Education vs. Elite Education Group |
| Youdao vs. Lixiang Education Holding | Youdao vs. Four Seasons Education | Youdao vs. Jianzhi Education Technology | Youdao 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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