Correlation Between Four Seasons and Golden Sun

Can any of the company-specific risk be diversified away by investing in both Four Seasons 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 Four Seasons and Golden Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Four Seasons Education and Golden Sun Education, you can compare the effects of market volatilities on Four Seasons 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 Four Seasons with a short position of Golden Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Seasons and Golden Sun.

Diversification Opportunities for Four Seasons and Golden Sun

-0.15

Correlation Coefficient

Four Seasons  Golden Sun

Good diversification

The 3 months correlation between Four and Golden is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education 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 Four Seasons 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 Four Seasons Education 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 Four Seasons i.e., Four Seasons and Golden Sun go up and down completely randomly.

Pair Corralation between Four Seasons and Golden Sun

Given the investment horizon of 90 days Four Seasons is expected to generate 12.51 times less return on investment than Golden Sun. In addition to that, Four Seasons is 1.03 times more volatile than Golden Sun Education. It trades about 0.01 of its total potential returns per unit of risk. Golden Sun Education is currently generating about 0.1 per unit of volatility. If you would invest  242.00  in Golden Sun Education on December 28, 2024 and sell it today you would earn a total of  62.00  from holding Golden Sun Education or generate 25.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Four Seasons Education  vs.  Golden Sun Education

Four Seasons Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Four Seasons is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Golden Sun Education

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Sun Education are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Golden Sun displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Four Seasons and Golden Sun

The main advantage of trading using opposite Four Seasons and Golden Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Seasons 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 Four Seasons Education 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.