Correlation Between China Liberal and American Public

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

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

Diversification Opportunities for China Liberal and American Public

-0.23

Correlation Coefficient

China Liberal  American Public

Very good diversification

The 3 months correlation between China and American is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding China Liberal Education and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education and China Liberal 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 China Liberal Education are associated (or correlated) with American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of China Liberal i.e., China Liberal and American Public go up and down completely randomly.

Pair Corralation between China Liberal and American Public

Given the investment horizon of 90 days China Liberal Education is expected to generate 35.03 times more return on investment than American Public. However, China Liberal is 35.03 times more volatile than American Public Education. It trades about 0.11 of its potential returns per unit of risk. American Public Education is currently generating about 0.05 per unit of risk. If you would invest  471.00  in China Liberal Education on December 29, 2024 and sell it today you would lose (269.00) from holding China Liberal Education or give up 57.11% of portfolio value over 90 days.

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

China Liberal Education  vs.  American Public Education

China Liberal Education

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Liberal Education are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, China Liberal unveiled solid returns over the last few months and may actually be approaching a breakup point.

American Public Education

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, American Public may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with China Liberal and American Public

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

The idea behind China Liberal Education and American Public 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.