Correlation Between Graham Holdings and Elite Education

Can any of the company-specific risk be diversified away by investing in both Graham Holdings and Elite Education 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 Elite Education 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 Elite Education Group, you can compare the effects of market volatilities on Graham Holdings and Elite Education 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 Elite Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and Elite Education.

Diversification Opportunities for Graham Holdings and Elite Education

0.68

Correlation Coefficient

Graham Holdings  Elite Education

Poor diversification

The 3 months correlation between Graham and Elite is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and Elite Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Education Group 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 Elite Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Education Group has no effect on the direction of Graham Holdings i.e., Graham Holdings and Elite Education go up and down completely randomly.

Pair Corralation between Graham Holdings and Elite Education

Considering the 90-day investment horizon Graham Holdings is expected to generate 2.16 times less return on investment than Elite Education. But when comparing it to its historical volatility, Graham Holdings Co is 2.44 times less risky than Elite Education. It trades about 0.15 of its potential returns per unit of risk. Elite Education Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Elite Education Group on September 2, 2024 and sell it today you would earn a total of  31.00  from holding Elite Education Group or generate 42.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Graham Holdings Co  vs.  Elite Education Group

Graham Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, Graham Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Elite Education Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Education Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Elite Education reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graham Holdings and Elite Education

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

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