Correlation Between Golden Sun and American Public

Can any of the company-specific risk be diversified away by investing in both Golden Sun and American Public 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 Golden Sun and American Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Golden Sun and American Public

-0.53

Correlation Coefficient

Golden Sun  American Public

Excellent diversification

The 3 months correlation between Golden and American is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Golden Sun Education and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education and Golden Sun 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 Golden Sun Education are associated (or correlated) with American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of Golden Sun i.e., Golden Sun and American Public go up and down completely randomly.

Pair Corralation between Golden Sun and American Public

Given the investment horizon of 90 days Golden Sun is expected to generate 5.92 times less return on investment than American Public. In addition to that, Golden Sun is 1.57 times more volatile than American Public Education. It trades about 0.02 of its total potential returns per unit of risk. American Public Education is currently generating about 0.16 per unit of volatility. If you would invest  2,052  in American Public Education on September 27, 2024 and sell it today you would earn a total of  189.00  from holding American Public Education or generate 9.21% return on investment over 90 days.

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

Golden Sun Education  vs.  American Public Education

Golden Sun Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Sun Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

American Public Education

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, American Public demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Sun and American Public

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

The idea behind Golden Sun Education and American Public 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.