Correlation Between Elite Education and Jianzhi Education

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

Diversification Opportunities for Elite Education and Jianzhi Education

-0.45

Correlation Coefficient

Elite Education  Jianzhi Education

Very good diversification

The 3 months correlation between Elite and Jianzhi is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and Jianzhi Education Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jianzhi 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 Jianzhi Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jianzhi Education has no effect on the direction of Elite Education i.e., Elite Education and Jianzhi Education go up and down completely randomly.

Pair Corralation between Elite Education and Jianzhi Education

Given the investment horizon of 90 days Elite Education Group is expected to under-perform the Jianzhi Education. But the stock apears to be less risky and, when comparing its historical volatility, Elite Education Group is 1.72 times less risky than Jianzhi Education. The stock trades about -0.14 of its potential returns per unit of risk. The Jianzhi Education Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Jianzhi Education Technology on December 28, 2024 and sell it today you would lose (10.00) from holding Jianzhi Education Technology or give up 10.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Elite Education Group  vs.  Jianzhi Education Technology

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 weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Jianzhi Education

Risk-Adjusted Performance

Weak

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

Pair Trading with Elite Education and Jianzhi Education

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

The idea behind Elite Education Group and Jianzhi Education Technology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.