Correlation Between Cogna Educacao and Strategic Education

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

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

Diversification Opportunities for Cogna Educacao and Strategic Education

0.26

Correlation Coefficient

Cogna Educacao  Strategic Education

Modest diversification

The 3 months correlation between Cogna and Strategic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cogna Educacao SA and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education and Cogna Educacao 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 Cogna Educacao SA are associated (or correlated) with Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Cogna Educacao i.e., Cogna Educacao and Strategic Education go up and down completely randomly.

Pair Corralation between Cogna Educacao and Strategic Education

Assuming the 90 days horizon Cogna Educacao SA is expected to under-perform the Strategic Education. In addition to that, Cogna Educacao is 3.41 times more volatile than Strategic Education. It trades about 0.0 of its total potential returns per unit of risk. Strategic Education is currently generating about 0.03 per unit of volatility. If you would invest  9,612  in Strategic Education on September 3, 2024 and sell it today you would earn a total of  269.00  from holding Strategic Education or generate 2.8% return on investment over 90 days.

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

Cogna Educacao SA  vs.  Strategic Education

Cogna Educacao SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogna Educacao SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cogna Educacao is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Strategic Education

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Strategic Education is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cogna Educacao and Strategic Education

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

The idea behind Cogna Educacao SA and Strategic 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.