Correlation Between CHINA EAST and Strategic Education
Can any of the company-specific risk be diversified away by investing in both CHINA EAST and Strategic 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 Strategic 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 Strategic Education, you can compare the effects of market volatilities on CHINA EAST and Strategic 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 Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EAST and Strategic Education.
Diversification Opportunities for CHINA EAST and Strategic Education
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHINA and Strategic is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EAST ED and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of CHINA EAST i.e., CHINA EAST and Strategic Education go up and down completely randomly.
Pair Corralation between CHINA EAST and Strategic Education
Assuming the 90 days horizon CHINA EAST ED is expected to generate 1.58 times more return on investment than Strategic Education. However, CHINA EAST is 1.58 times more volatile than Strategic Education. It trades about 0.01 of its potential returns per unit of risk. Strategic Education is currently generating about -0.18 per unit of risk. 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 |
CHINA EAST ED vs. Strategic Education
Performance |
| Timeline |
| CHINA EAST ED |
| Strategic Education |
CHINA EAST and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EAST and Strategic Education
The main advantage of trading using opposite CHINA EAST and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EAST position performs unexpectedly, Strategic 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 Strategic Education will offset losses from the drop in Strategic 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 |
| Strategic Education vs. IDP EDUCATION LTD | Strategic Education vs. TAL Education Group | Strategic Education vs. Grand Canyon Education | Strategic Education 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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