Correlation Between Ambow Education and Genius

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

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

Diversification Opportunities for Ambow Education and Genius

-0.24

Correlation Coefficient

Ambow Education  Genius

Very good diversification

The 3 months correlation between Ambow and Genius is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding and Genius Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Group and Ambow 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 Ambow Education Holding are associated (or correlated) with Genius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Group has no effect on the direction of Ambow Education i.e., Ambow Education and Genius go up and down completely randomly.

Pair Corralation between Ambow Education and Genius

Given the investment horizon of 90 days Ambow Education is expected to generate 3.49 times less return on investment than Genius. But when comparing it to its historical volatility, Ambow Education Holding is 3.62 times less risky than Genius. It trades about 0.05 of its potential returns per unit of risk. Genius Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  721.00  in Genius Group on September 19, 2024 and sell it today you would lose (652.36) from holding Genius Group or give up 90.48% of portfolio value over 90 days.

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

Ambow Education Holding  vs.  Genius Group

Ambow Education Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ambow Education Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Ambow Education displayed solid returns over the last few months and may actually be approaching a breakup point.

Genius Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genius Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Genius unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambow Education and Genius

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

The idea behind Ambow Education Holding and Genius 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.