Correlation Between China Liberal and Genius

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

Diversification Opportunities for China Liberal and Genius

0.47

Correlation Coefficient

China Liberal  Genius

Very weak diversification

The 3 months correlation between China and Genius is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding China Liberal Education and Genius Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Group 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 Genius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Group has no effect on the direction of China Liberal i.e., China Liberal and Genius go up and down completely randomly.

Pair Corralation between China Liberal and Genius

Given the investment horizon of 90 days China Liberal Education is expected to generate 13.71 times more return on investment than Genius. However, China Liberal is 13.71 times more volatile than Genius Group. It trades about 0.11 of its potential returns per unit of risk. Genius Group is currently generating about -0.12 per unit of risk. If you would invest  471.00  in China Liberal Education on December 28, 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

China Liberal Education  vs.  Genius Group

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.

Genius Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with China Liberal and Genius

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

The idea behind China Liberal Education and Genius Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.