Correlation Between ITT Educational and Sunlands Technology

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

By analyzing existing cross correlation between ITT Educational Services and Sunlands Technology Group, you can compare the effects of market volatilities on ITT Educational and Sunlands Technology 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 ITT Educational with a short position of Sunlands Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITT Educational and Sunlands Technology.

Diversification Opportunities for ITT Educational and Sunlands Technology

0.0

Correlation Coefficient

ITT Educational  Sunlands Technology

Pay attention - limited upside

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

Pair Corralation between ITT Educational and Sunlands Technology

If you would invest  729.00  in Sunlands Technology Group on September 20, 2024 and sell it today you would lose (126.32) from holding Sunlands Technology Group or give up 17.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.45%
Values	Daily Returns

ITT Educational Services  vs.  Sunlands Technology Group

ITT Educational Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sunlands Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sunlands Technology Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sunlands Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ITT Educational and Sunlands Technology

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

The idea behind ITT Educational Services and Sunlands Technology Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.