Correlation Between Global Education and MAS Financial

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

By analyzing existing cross correlation between Global Education Limited and MAS Financial Services, you can compare the effects of market volatilities on Global Education and MAS Financial 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 Global Education with a short position of MAS Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Education and MAS Financial.

Diversification Opportunities for Global Education and MAS Financial

0.02

Correlation Coefficient

Global Education  MAS Financial

Significant diversification

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

Pair Corralation between Global Education and MAS Financial

Assuming the 90 days trading horizon Global Education Limited is expected to generate 1.75 times more return on investment than MAS Financial. However, Global Education is 1.75 times more volatile than MAS Financial Services. It trades about 0.0 of its potential returns per unit of risk. MAS Financial Services is currently generating about -0.02 per unit of risk. If you would invest  20,354  in Global Education Limited on September 4, 2024 and sell it today you would lose (720.00) from holding Global Education Limited or give up 3.54% of portfolio value over 90 days.

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

Global Education Limited  vs.  MAS Financial Services

Global Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Education Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Global Education is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

MAS Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAS Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, MAS Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Education and MAS Financial

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

The idea behind Global Education Limited and MAS Financial Services 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.