Correlation Between Educational Book and Song Hong

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

By analyzing existing cross correlation between Educational Book In and Song Hong Garment, you can compare the effects of market volatilities on Educational Book and Song Hong 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 Educational Book with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Educational Book and Song Hong.

Diversification Opportunities for Educational Book and Song Hong

0.0

Correlation Coefficient

Educational Book  Song Hong

Pay attention - limited upside

The 3 months correlation between Educational and Song is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Educational Book In and Song Hong Garment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Garment and Educational Book 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 Educational Book In are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Garment has no effect on the direction of Educational Book i.e., Educational Book and Song Hong go up and down completely randomly.

Pair Corralation between Educational Book and Song Hong

If you would invest  1,550,000  in Educational Book In on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Educational Book In or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Educational Book In  vs.  Song Hong Garment

Educational Book

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Educational Book In has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Educational Book is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Song Hong Garment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Song Hong Garment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Song Hong is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Educational Book and Song Hong

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

The idea behind Educational Book In and Song Hong Garment 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.