Correlation Between Strategic Education and CHINA EAST
Can any of the company-specific risk be diversified away by investing in both Strategic Education and CHINA EAST 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 Strategic Education and CHINA EAST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Education and CHINA EAST ED, you can compare the effects of market volatilities on Strategic Education and CHINA EAST 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 Strategic Education with a short position of CHINA EAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and CHINA EAST.
Diversification Opportunities for Strategic Education and CHINA EAST
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Strategic and CHINA is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and CHINA EAST ED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EAST ED and Strategic 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 Strategic Education are associated (or correlated) with CHINA EAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EAST ED has no effect on the direction of Strategic Education i.e., Strategic Education and CHINA EAST go up and down completely randomly.
Pair Corralation between Strategic Education and CHINA EAST
Assuming the 90 days horizon Strategic Education is expected to under-perform the CHINA EAST. But the stock apears to be less risky and, when comparing its historical volatility, Strategic Education is 1.58 times less risky than CHINA EAST. The stock trades about -0.18 of its potential returns per unit of risk. The CHINA EAST ED is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 32.00 in CHINA EAST ED on September 27, 2024 and sell it today you would earn a total of 0.00 from holding CHINA EAST ED or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Education vs. CHINA EAST ED
Performance |
| Timeline |
| Strategic Education |
| CHINA EAST ED |
Strategic Education and CHINA EAST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Education and CHINA EAST
The main advantage of trading using opposite Strategic Education and CHINA EAST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Education position performs unexpectedly, CHINA EAST 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 EAST will offset losses from the drop in CHINA EAST's long position.| Strategic Education vs. IDP EDUCATION LTD | Strategic Education vs. TAL Education Group | Strategic Education vs. Grand Canyon Education | Strategic Education vs. Graham Holdings Co |
| CHINA EAST vs. IDP EDUCATION LTD | CHINA EAST vs. TAL Education Group | CHINA EAST vs. Grand Canyon Education | CHINA EAST vs. Graham Holdings Co |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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