Correlation Between Sunlands Technology and Lixiang Education
Can any of the company-specific risk be diversified away by investing in both Sunlands Technology and Lixiang Education 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 Sunlands Technology and Lixiang Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunlands Technology Group and Lixiang Education Holding, you can compare the effects of market volatilities on Sunlands Technology and Lixiang Education 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 Sunlands Technology with a short position of Lixiang Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunlands Technology and Lixiang Education.
Diversification Opportunities for Sunlands Technology and Lixiang Education
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sunlands and Lixiang is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sunlands Technology Group and Lixiang Education Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixiang Education Holding and Sunlands Technology 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 Sunlands Technology Group are associated (or correlated) with Lixiang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixiang Education Holding has no effect on the direction of Sunlands Technology i.e., Sunlands Technology and Lixiang Education go up and down completely randomly.
Pair Corralation between Sunlands Technology and Lixiang Education
Considering the 90-day investment horizon Sunlands Technology Group is expected to generate 0.6 times more return on investment than Lixiang Education. However, Sunlands Technology Group is 1.66 times less risky than Lixiang Education. It trades about -0.19 of its potential returns per unit of risk. Lixiang Education Holding is currently generating about -0.22 per unit of risk. If you would invest 709.00 in Sunlands Technology Group on August 28, 2024 and sell it today you would lose (104.00) from holding Sunlands Technology Group or give up 14.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunlands Technology Group vs. Lixiang Education Holding
Performance |
| Timeline |
| Sunlands Technology |
| Lixiang Education Holding |
Sunlands Technology and Lixiang Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunlands Technology and Lixiang Education
The main advantage of trading using opposite Sunlands Technology and Lixiang Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunlands Technology position performs unexpectedly, Lixiang Education 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 Lixiang Education will offset losses from the drop in Lixiang Education's long position.| Sunlands Technology vs. American Public Education | Sunlands Technology vs. Lincoln Educational Services | Sunlands Technology vs. Adtalem Global Education |
| Lixiang Education vs. China Liberal Education | Lixiang Education vs. Four Seasons Education | Lixiang Education vs. Jianzhi Education Technology | Lixiang Education 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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