Correlation Between First High and Gaotu Techedu

Can any of the company-specific risk be diversified away by investing in both First High and Gaotu Techedu 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 First High and Gaotu Techedu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First High School Education and Gaotu Techedu DRC, you can compare the effects of market volatilities on First High and Gaotu Techedu 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 First High with a short position of Gaotu Techedu. Check out your portfolio center. Please also check ongoing floating volatility patterns of First High and Gaotu Techedu.

Diversification Opportunities for First High and Gaotu Techedu

-0.02

Correlation Coefficient

First High  Gaotu Techedu

Good diversification

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

Pair Corralation between First High and Gaotu Techedu

If you would invest  19.00  in First High School Education on September 27, 2024 and sell it today you would earn a total of  0.00  from holding First High School Education or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

First High School Education  vs.  Gaotu Techedu DRC

First High School

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gaotu Techedu DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaotu Techedu DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with First High and Gaotu Techedu

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

The idea behind First High School Education and Gaotu Techedu DRC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.