Correlation Between Aritzia and China Liberal

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

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

Diversification Opportunities for Aritzia and China Liberal

0.17

Correlation Coefficient

Aritzia  China Liberal

Average diversification

The 3 months correlation between Aritzia and China is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aritzia and China Liberal Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Liberal Education and Aritzia 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 Aritzia are associated (or correlated) with China Liberal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Liberal Education has no effect on the direction of Aritzia i.e., Aritzia and China Liberal go up and down completely randomly.

Pair Corralation between Aritzia and China Liberal

Assuming the 90 days horizon Aritzia is expected to generate 23.29 times less return on investment than China Liberal. But when comparing it to its historical volatility, Aritzia is 13.29 times less risky than China Liberal. It trades about 0.02 of its potential returns per unit of risk. China Liberal Education is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,418  in China Liberal Education on September 26, 2024 and sell it today you would lose (1,148) from holding China Liberal Education or give up 80.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Aritzia  vs.  China Liberal Education

Aritzia

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aritzia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

China Liberal Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Liberal Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aritzia and China Liberal

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

The idea behind Aritzia and China Liberal 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.