Correlation Between Elite Education and Golden Sun

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

Diversification Opportunities for Elite Education and Golden Sun

0.02

Correlation Coefficient

Elite Education  Golden Sun

Significant diversification

The 3 months correlation between Elite and Golden is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and Golden Sun Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Sun Education 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 Golden Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Sun Education has no effect on the direction of Elite Education i.e., Elite Education and Golden Sun go up and down completely randomly.

Pair Corralation between Elite Education and Golden Sun

Given the investment horizon of 90 days Elite Education Group is expected to under-perform the Golden Sun. But the stock apears to be less risky and, when comparing its historical volatility, Elite Education Group is 1.58 times less risky than Golden Sun. The stock trades about -0.01 of its potential returns per unit of risk. The Golden Sun Education is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  630.00  in Golden Sun Education on November 20, 2024 and sell it today you would lose (362.00) from holding Golden Sun Education or give up 57.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.91%
Values	Daily Returns

Elite Education Group  vs.  Golden Sun Education

Elite Education Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elite Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Elite Education is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Golden Sun Education

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Elite Education and Golden Sun

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

The idea behind Elite Education Group and Golden Sun 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.