Correlation Between Graham Holdings and Skillful Craftsman

Can any of the company-specific risk be diversified away by investing in both Graham Holdings and Skillful Craftsman 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 Graham Holdings and Skillful Craftsman into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Graham Holdings and Skillful Craftsman

-0.22

Correlation Coefficient

Graham Holdings  Skillful Craftsman

Very good diversification

The 3 months correlation between Graham and Skillful is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and Skillful Craftsman Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skillful Craftsman and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with Skillful Craftsman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skillful Craftsman has no effect on the direction of Graham Holdings i.e., Graham Holdings and Skillful Craftsman go up and down completely randomly.

Pair Corralation between Graham Holdings and Skillful Craftsman

Considering the 90-day investment horizon Graham Holdings Co is expected to generate 0.52 times more return on investment than Skillful Craftsman. However, Graham Holdings Co is 1.93 times less risky than Skillful Craftsman. It trades about 0.12 of its potential returns per unit of risk. Skillful Craftsman Education is currently generating about 0.04 per unit of risk. If you would invest  87,106  in Graham Holdings Co on December 29, 2024 and sell it today you would earn a total of  10,211  from holding Graham Holdings Co or generate 11.72% return on investment over 90 days.

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

Graham Holdings Co  vs.  Skillful Craftsman Education

Graham Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, Graham Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Skillful Craftsman

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Skillful Craftsman Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Skillful Craftsman may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Graham Holdings and Skillful Craftsman

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

The idea behind Graham Holdings Co and Skillful Craftsman 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.