Correlation Between Ambow Education and Jianzhi Education

Can any of the company-specific risk be diversified away by investing in both Ambow Education and Jianzhi 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 Ambow Education and Jianzhi Education 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 Jianzhi Education Technology, you can compare the effects of market volatilities on Ambow Education and Jianzhi 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 Ambow Education with a short position of Jianzhi Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambow Education and Jianzhi Education.

Diversification Opportunities for Ambow Education and Jianzhi Education

0.16

Correlation Coefficient

Ambow Education  Jianzhi Education

Average diversification

The 3 months correlation between Ambow and Jianzhi is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding and Jianzhi Education Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jianzhi Education 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 Jianzhi Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jianzhi Education has no effect on the direction of Ambow Education i.e., Ambow Education and Jianzhi Education go up and down completely randomly.

Pair Corralation between Ambow Education and Jianzhi Education

Given the investment horizon of 90 days Ambow Education Holding is expected to generate 2.85 times more return on investment than Jianzhi Education. However, Ambow Education is 2.85 times more volatile than Jianzhi Education Technology. It trades about 0.05 of its potential returns per unit of risk. Jianzhi Education Technology is currently generating about -0.03 per unit of risk. If you would invest  145.00  in Ambow Education Holding on September 19, 2024 and sell it today you would earn a total of  3.00  from holding Ambow Education Holding or generate 2.07% return on investment over 90 days.

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

Ambow Education Holding  vs.  Jianzhi Education Technology

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.

Jianzhi Education

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Ambow Education and Jianzhi Education

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

The idea behind Ambow Education Holding and Jianzhi Education 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.

Check out your portfolio center.

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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.