Correlation Between GAMING FAC and CAREER EDUCATION

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

By analyzing existing cross correlation between GAMING FAC SA and CAREER EDUCATION, you can compare the effects of market volatilities on GAMING FAC and CAREER 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 GAMING FAC with a short position of CAREER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMING FAC and CAREER EDUCATION.

Diversification Opportunities for GAMING FAC and CAREER EDUCATION

-0.69

Correlation Coefficient

GAMING FAC  CAREER EDUCATION

Excellent diversification

The 3 months correlation between GAMING and CAREER is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION and GAMING FAC 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 GAMING FAC SA are associated (or correlated) with CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of GAMING FAC i.e., GAMING FAC and CAREER EDUCATION go up and down completely randomly.

Pair Corralation between GAMING FAC and CAREER EDUCATION

Assuming the 90 days horizon GAMING FAC SA is expected to under-perform the CAREER EDUCATION. In addition to that, GAMING FAC is 1.41 times more volatile than CAREER EDUCATION. It trades about -0.05 of its total potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.1 per unit of volatility. If you would invest  2,269  in CAREER EDUCATION on October 9, 2024 and sell it today you would earn a total of  231.00  from holding CAREER EDUCATION or generate 10.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.37%
Values	Daily Returns

GAMING FAC SA  vs.  CAREER EDUCATION

GAMING FAC SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMING FAC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CAREER EDUCATION

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GAMING FAC and CAREER EDUCATION

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

The idea behind GAMING FAC SA and CAREER EDUCATION 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.