Correlation Between Strategic Education and Lixiang Education
Can any of the company-specific risk be diversified away by investing in both Strategic Education 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 Strategic Education and Lixiang Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Education and Lixiang Education Holding, you can compare the effects of market volatilities on Strategic Education 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 Strategic Education with a short position of Lixiang Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and Lixiang Education.
Diversification Opportunities for Strategic Education and Lixiang Education
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Strategic and Lixiang is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education 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 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 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 Strategic Education i.e., Strategic Education and Lixiang Education go up and down completely randomly.
Pair Corralation between Strategic Education and Lixiang Education
Given the investment horizon of 90 days Strategic Education is expected to generate 0.4 times more return on investment than Lixiang Education. However, Strategic Education is 2.51 times less risky than Lixiang Education. It trades about 0.26 of its potential returns per unit of risk. Lixiang Education Holding is currently generating about -0.19 per unit of risk. If you would invest 8,744 in Strategic Education on August 30, 2024 and sell it today you would earn a total of 1,212 from holding Strategic Education or generate 13.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Education vs. Lixiang Education Holding
Performance |
| Timeline |
| Strategic Education |
| Lixiang Education Holding |
Strategic Education and Lixiang Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Education and Lixiang Education
The main advantage of trading using opposite Strategic Education and Lixiang Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Education 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.| Strategic Education vs. Element Solutions | Strategic Education vs. DoubleVerify Holdings | Strategic Education vs. CECO Environmental Corp | Strategic Education vs. American Public 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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