Correlation Between ATA Creativity and Sunlands Technology

Can any of the company-specific risk be diversified away by investing in both ATA Creativity and Sunlands Technology 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 ATA Creativity and Sunlands Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATA Creativity Global and Sunlands Technology Group, you can compare the effects of market volatilities on ATA Creativity and Sunlands Technology 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 ATA Creativity with a short position of Sunlands Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATA Creativity and Sunlands Technology.

Diversification Opportunities for ATA Creativity and Sunlands Technology

-0.39

Correlation Coefficient

ATA Creativity  Sunlands Technology

Very good diversification

The 3 months correlation between ATA and Sunlands is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ATA Creativity Global and Sunlands Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunlands Technology and ATA Creativity 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 ATA Creativity Global are associated (or correlated) with Sunlands Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunlands Technology has no effect on the direction of ATA Creativity i.e., ATA Creativity and Sunlands Technology go up and down completely randomly.

Pair Corralation between ATA Creativity and Sunlands Technology

Given the investment horizon of 90 days ATA Creativity Global is expected to generate 1.89 times more return on investment than Sunlands Technology. However, ATA Creativity is 1.89 times more volatile than Sunlands Technology Group. It trades about 0.04 of its potential returns per unit of risk. Sunlands Technology Group is currently generating about 0.0 per unit of risk. If you would invest  82.00  in ATA Creativity Global on December 1, 2024 and sell it today you would earn a total of  1.00  from holding ATA Creativity Global or generate 1.22% return on investment over 90 days.

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

ATA Creativity Global  vs.  Sunlands Technology Group

ATA Creativity Global

Risk-Adjusted Performance

Very Weak

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

Sunlands Technology

Risk-Adjusted Performance

Insignificant

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

Pair Trading with ATA Creativity and Sunlands Technology

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

The idea behind ATA Creativity Global and Sunlands Technology Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.