Correlation Between Elite Education and Ambow Education
Can any of the company-specific risk be diversified away by investing in both Elite Education and Ambow 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 Elite Education and Ambow Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Education Group and Ambow Education Holding, you can compare the effects of market volatilities on Elite Education and Ambow 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 Elite Education with a short position of Ambow Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Education and Ambow Education.
Diversification Opportunities for Elite Education and Ambow Education
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elite and Ambow is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and Ambow Education Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambow Education Holding and Elite 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 Elite Education Group are associated (or correlated) with Ambow Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambow Education Holding has no effect on the direction of Elite Education i.e., Elite Education and Ambow Education go up and down completely randomly.
Pair Corralation between Elite Education and Ambow Education
Given the investment horizon of 90 days Elite Education Group is expected to under-perform the Ambow Education. But the stock apears to be less risky and, when comparing its historical volatility, Elite Education Group is 3.48 times less risky than Ambow Education. The stock trades about -0.09 of its potential returns per unit of risk. The Ambow Education Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 163.00 in Ambow Education Holding on December 2, 2024 and sell it today you would earn a total of 42.00 from holding Ambow Education Holding or generate 25.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Elite Education Group vs. Ambow Education Holding
Performance |
Timeline |
Elite Education Group |
Ambow Education Holding |
Elite Education and Ambow Education Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elite Education and Ambow Education
The main advantage of trading using opposite Elite Education and Ambow Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Education position performs unexpectedly, Ambow 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 Ambow Education will offset losses from the drop in Ambow Education's long position.Elite Education vs. Golden Sun Education | Elite Education vs. Jianzhi Education Technology | Elite Education vs. Genius Group | Elite Education vs. Lixiang Education Holding |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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