Correlation Between Ambow Education and Vitru

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

Diversification Opportunities for Ambow Education and Vitru

0.05

Correlation Coefficient

Ambow Education  Vitru

Significant diversification

The 3 months correlation between Ambow and Vitru is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding and Vitru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitru 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 Vitru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitru has no effect on the direction of Ambow Education i.e., Ambow Education and Vitru go up and down completely randomly.

Pair Corralation between Ambow Education and Vitru

If you would invest  160.00  in Ambow Education Holding on September 1, 2024 and sell it today you would earn a total of  20.00  from holding Ambow Education Holding or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Ambow Education Holding  vs.  Vitru

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 inconsistent fundamental drivers, Ambow Education displayed solid returns over the last few months and may actually be approaching a breakup point.

Vitru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vitru has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vitru is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ambow Education and Vitru

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

The idea behind Ambow Education Holding and Vitru 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.