Correlation Between Gravitas Education and Vasta Platform

Can any of the company-specific risk be diversified away by investing in both Gravitas Education and Vasta Platform 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 Gravitas Education and Vasta Platform into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Gravitas Education and Vasta Platform

0.42

Correlation Coefficient

Gravitas Education  Vasta Platform

Very weak diversification

The 3 months correlation between Gravitas and Vasta is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gravitas Education Holdings and Vasta Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vasta Platform and Gravitas 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 Gravitas Education Holdings are associated (or correlated) with Vasta Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vasta Platform has no effect on the direction of Gravitas Education i.e., Gravitas Education and Vasta Platform go up and down completely randomly.

Pair Corralation between Gravitas Education and Vasta Platform

Given the investment horizon of 90 days Gravitas Education Holdings is expected to generate 1.73 times more return on investment than Vasta Platform. However, Gravitas Education is 1.73 times more volatile than Vasta Platform. It trades about 0.04 of its potential returns per unit of risk. Vasta Platform is currently generating about -0.04 per unit of risk. If you would invest  1,155  in Gravitas Education Holdings on September 18, 2024 and sell it today you would earn a total of  154.00  from holding Gravitas Education Holdings or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	28.63%
Values	Daily Returns

Gravitas Education Holdings  vs.  Vasta Platform

Gravitas Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gravitas Education Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Gravitas Education is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Vasta Platform

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vasta Platform has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gravitas Education and Vasta Platform

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

The idea behind Gravitas Education Holdings and Vasta Platform 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 Global Correlations module to find global opportunities by holding instruments from different markets.