Correlation Between CAREER EDUCATION and AAC TECHNOLOGHLDGADR

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

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

Diversification Opportunities for CAREER EDUCATION and AAC TECHNOLOGHLDGADR

0.72

Correlation Coefficient

CAREER EDUCATION  AAC TECHNOLOGHLDGADR

Poor diversification

The 3 months correlation between CAREER and AAC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CAREER EDUCATION and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and CAREER 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 CAREER EDUCATION are associated (or correlated) with AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of CAREER EDUCATION i.e., CAREER EDUCATION and AAC TECHNOLOGHLDGADR go up and down completely randomly.

Pair Corralation between CAREER EDUCATION and AAC TECHNOLOGHLDGADR

Assuming the 90 days trading horizon CAREER EDUCATION is expected to generate 1.2 times less return on investment than AAC TECHNOLOGHLDGADR. But when comparing it to its historical volatility, CAREER EDUCATION is 1.39 times less risky than AAC TECHNOLOGHLDGADR. It trades about 0.07 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  233.00  in AAC TECHNOLOGHLDGADR on October 10, 2024 and sell it today you would earn a total of  225.00  from holding AAC TECHNOLOGHLDGADR or generate 96.57% return on investment over 90 days.

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

CAREER EDUCATION  vs.  AAC TECHNOLOGHLDGADR

CAREER EDUCATION

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AAC TECHNOLOGHLDGADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAREER EDUCATION and AAC TECHNOLOGHLDGADR

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

The idea behind CAREER EDUCATION and AAC TECHNOLOGHLDGADR 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 Global Correlations module to find global opportunities by holding instruments from different markets.