Correlation Between Elite Education and Prestige Wealth

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

Diversification Opportunities for Elite Education and Prestige Wealth

0.86

Correlation Coefficient

Elite Education  Prestige Wealth

Very poor diversification

The 3 months correlation between Elite and Prestige is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and Prestige Wealth Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Wealth Ordinary 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 Prestige Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Wealth Ordinary has no effect on the direction of Elite Education i.e., Elite Education and Prestige Wealth go up and down completely randomly.

Pair Corralation between Elite Education and Prestige Wealth

Given the investment horizon of 90 days Elite Education Group is expected to generate 0.35 times more return on investment than Prestige Wealth. However, Elite Education Group is 2.83 times less risky than Prestige Wealth. It trades about -0.15 of its potential returns per unit of risk. Prestige Wealth Ordinary is currently generating about -0.07 per unit of risk. If you would invest  110.00  in Elite Education Group on December 19, 2024 and sell it today you would lose (39.00) from holding Elite Education Group or give up 35.45% of portfolio value over 90 days.

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

Elite Education Group  vs.  Prestige Wealth Ordinary

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 unfluctuating 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.

Prestige Wealth Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prestige Wealth Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Elite Education and Prestige Wealth

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

The idea behind Elite Education Group and Prestige Wealth Ordinary 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.