Correlation Between CHINA EAST and IDP EDUCATION
Can any of the company-specific risk be diversified away by investing in both CHINA EAST and IDP 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 CHINA EAST and IDP EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EAST ED and IDP EDUCATION LTD, you can compare the effects of market volatilities on CHINA EAST and IDP 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 CHINA EAST with a short position of IDP EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EAST and IDP EDUCATION.
Diversification Opportunities for CHINA EAST and IDP EDUCATION
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and IDP is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EAST ED and IDP EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDP EDUCATION LTD and CHINA EAST 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 CHINA EAST ED are associated (or correlated) with IDP EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDP EDUCATION LTD has no effect on the direction of CHINA EAST i.e., CHINA EAST and IDP EDUCATION go up and down completely randomly.
Pair Corralation between CHINA EAST and IDP EDUCATION
Assuming the 90 days horizon CHINA EAST ED is expected to generate 0.94 times more return on investment than IDP EDUCATION. However, CHINA EAST ED is 1.06 times less risky than IDP EDUCATION. It trades about -0.02 of its potential returns per unit of risk. IDP EDUCATION LTD is currently generating about -0.14 per unit of risk. If you would invest 33.00 in CHINA EAST ED on September 26, 2024 and sell it today you would lose (1.00) from holding CHINA EAST ED or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EAST ED vs. IDP EDUCATION LTD
Performance |
| Timeline |
| CHINA EAST ED |
| IDP EDUCATION LTD |
CHINA EAST and IDP EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EAST and IDP EDUCATION
The main advantage of trading using opposite CHINA EAST and IDP EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EAST position performs unexpectedly, IDP 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 IDP EDUCATION will offset losses from the drop in IDP EDUCATION's long position.| CHINA EAST vs. IDP EDUCATION LTD | CHINA EAST vs. TAL Education Group | CHINA EAST vs. Grand Canyon Education | CHINA EAST vs. Graham Holdings Co |
| IDP EDUCATION vs. TAL Education Group | IDP EDUCATION vs. Grand Canyon Education | IDP EDUCATION vs. Graham Holdings Co | IDP EDUCATION vs. Strategic Education |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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