Correlation Between Wah Fu and Legacy Education
Can any of the company-specific risk be diversified away by investing in both Wah Fu and Legacy 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 Wah Fu and Legacy Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Fu Education and Legacy Education, you can compare the effects of market volatilities on Wah Fu and Legacy 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 Wah Fu with a short position of Legacy Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Fu and Legacy Education.
Diversification Opportunities for Wah Fu and Legacy Education
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wah and Legacy is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wah Fu Education and Legacy Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Education and Wah Fu 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 Wah Fu Education are associated (or correlated) with Legacy Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Education has no effect on the direction of Wah Fu i.e., Wah Fu and Legacy Education go up and down completely randomly.
Pair Corralation between Wah Fu and Legacy Education
Given the investment horizon of 90 days Wah Fu Education is expected to under-perform the Legacy Education. But the stock apears to be less risky and, when comparing its historical volatility, Wah Fu Education is 1.4 times less risky than Legacy Education. The stock trades about -0.01 of its potential returns per unit of risk. The Legacy Education is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 402.00 in Legacy Education on September 1, 2024 and sell it today you would earn a total of 419.00 from holding Legacy Education or generate 104.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 12.37% |
| Values | Daily Returns |
Wah Fu Education vs. Legacy Education
Performance |
| Timeline |
| Wah Fu Education |
| Legacy Education |
Wah Fu and Legacy Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Fu and Legacy Education
The main advantage of trading using opposite Wah Fu and Legacy Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Fu position performs unexpectedly, Legacy 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 Legacy Education will offset losses from the drop in Legacy Education's long position.| Wah Fu vs. Four Seasons Education | Wah Fu vs. Sunlands Technology Group | Wah Fu vs. 51Talk Online Education | Wah Fu vs. Golden Sun Education |
| Legacy Education vs. Bt Brands | Legacy Education vs. Biglari Holdings | Legacy Education vs. Radcom | Legacy Education vs. Grupo Televisa SAB |
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 CEOs Directory module to screen CEOs from public companies around the world.
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