Correlation Between G8 EDUCATION and TRAVEL +

Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and TRAVEL + 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 G8 EDUCATION and TRAVEL + into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G8 EDUCATION and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on G8 EDUCATION and TRAVEL + 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 G8 EDUCATION with a short position of TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and TRAVEL +.

Diversification Opportunities for G8 EDUCATION and TRAVEL +

0.82

Correlation Coefficient

G8 EDUCATION  TRAVEL +

Very poor diversification

The 3 months correlation between 3EAG and TRAVEL is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL and G8 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 G8 EDUCATION are associated (or correlated) with TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and TRAVEL + go up and down completely randomly.

Pair Corralation between G8 EDUCATION and TRAVEL +

Assuming the 90 days trading horizon G8 EDUCATION is expected to generate 0.79 times more return on investment than TRAVEL +. However, G8 EDUCATION is 1.26 times less risky than TRAVEL +. It trades about -0.01 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about -0.05 per unit of risk. If you would invest  76.00  in G8 EDUCATION on December 27, 2024 and sell it today you would lose (1.00) from holding G8 EDUCATION or give up 1.32% of portfolio value over 90 days.

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

G8 EDUCATION  vs.  TRAVEL LEISURE DL 01

G8 EDUCATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days G8 EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, G8 EDUCATION is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

TRAVEL LEISURE DL

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAVEL LEISURE DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TRAVEL + is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with G8 EDUCATION and TRAVEL +

The main advantage of trading using opposite G8 EDUCATION and TRAVEL + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, TRAVEL + 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 TRAVEL + will offset losses from the drop in TRAVEL +'s long position.

The idea behind G8 EDUCATION and TRAVEL LEISURE DL 01 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..