Correlation Between CHINA EAST and Graham Holdings
Can any of the company-specific risk be diversified away by investing in both CHINA EAST and Graham Holdings 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 Graham Holdings 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 Graham Holdings Co, you can compare the effects of market volatilities on CHINA EAST and Graham Holdings 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 Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EAST and Graham Holdings.
Diversification Opportunities for CHINA EAST and Graham Holdings
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CHINA and Graham is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EAST ED and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings 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 Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of CHINA EAST i.e., CHINA EAST and Graham Holdings go up and down completely randomly.
Pair Corralation between CHINA EAST and Graham Holdings
Assuming the 90 days horizon CHINA EAST is expected to generate 1.06 times less return on investment than Graham Holdings. In addition to that, CHINA EAST is 1.48 times more volatile than Graham Holdings Co. It trades about 0.07 of its total potential returns per unit of risk. Graham Holdings Co is currently generating about 0.1 per unit of volatility. If you would invest 64,684 in Graham Holdings Co on September 27, 2024 and sell it today you would earn a total of 19,316 from holding Graham Holdings Co or generate 29.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EAST ED vs. Graham Holdings Co
Performance |
| Timeline |
| CHINA EAST ED |
| Graham Holdings |
CHINA EAST and Graham Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EAST and Graham Holdings
The main advantage of trading using opposite CHINA EAST and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EAST position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' 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 |
| Graham Holdings vs. IDP EDUCATION LTD | Graham Holdings vs. TAL Education Group | Graham Holdings vs. Grand Canyon Education | Graham Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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