Correlation Between Offcn Education and Aofu Environmental

Can any of the company-specific risk be diversified away by investing in both Offcn Education and Aofu Environmental 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 Offcn Education and Aofu Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Offcn Education Technology and Aofu Environmental Technology, you can compare the effects of market volatilities on Offcn Education and Aofu Environmental 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 Offcn Education with a short position of Aofu Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Offcn Education and Aofu Environmental.

Diversification Opportunities for Offcn Education and Aofu Environmental

0.55

Correlation Coefficient

Offcn Education  Aofu Environmental

Very weak diversification

The 3 months correlation between Offcn and Aofu is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Offcn Education Technology and Aofu Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aofu Environmental and Offcn 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 Offcn Education Technology are associated (or correlated) with Aofu Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aofu Environmental has no effect on the direction of Offcn Education i.e., Offcn Education and Aofu Environmental go up and down completely randomly.

Pair Corralation between Offcn Education and Aofu Environmental

Assuming the 90 days trading horizon Offcn Education Technology is expected to generate 1.11 times more return on investment than Aofu Environmental. However, Offcn Education is 1.11 times more volatile than Aofu Environmental Technology. It trades about -0.21 of its potential returns per unit of risk. Aofu Environmental Technology is currently generating about -0.27 per unit of risk. If you would invest  393.00  in Offcn Education Technology on October 21, 2024 and sell it today you would lose (59.00) from holding Offcn Education Technology or give up 15.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Offcn Education Technology  vs.  Aofu Environmental Technology

Offcn Education Tech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Offcn Education Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Offcn Education sustained solid returns over the last few months and may actually be approaching a breakup point.

Aofu Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aofu Environmental Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aofu Environmental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Offcn Education and Aofu Environmental

The main advantage of trading using opposite Offcn Education and Aofu Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Offcn Education position performs unexpectedly, Aofu Environmental 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 Aofu Environmental will offset losses from the drop in Aofu Environmental's long position.

The idea behind Offcn Education Technology and Aofu Environmental Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.