Correlation Between Golden Sun and Lixiang Education

Can any of the company-specific risk be diversified away by investing in both Golden Sun and Lixiang 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 Golden Sun and Lixiang Education 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 Lixiang Education Holding, you can compare the effects of market volatilities on Golden Sun and Lixiang 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 Golden Sun with a short position of Lixiang Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Sun and Lixiang Education.

Diversification Opportunities for Golden Sun and Lixiang Education

0.33

Correlation Coefficient

Golden Sun  Lixiang Education

Weak diversification

The 3 months correlation between Golden and Lixiang is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Golden Sun Education and Lixiang Education Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixiang Education Holding 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 Lixiang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixiang Education Holding has no effect on the direction of Golden Sun i.e., Golden Sun and Lixiang Education go up and down completely randomly.

Pair Corralation between Golden Sun and Lixiang Education

Given the investment horizon of 90 days Golden Sun is expected to generate 5.49 times less return on investment than Lixiang Education. But when comparing it to its historical volatility, Golden Sun Education is 2.41 times less risky than Lixiang Education. It trades about 0.08 of its potential returns per unit of risk. Lixiang Education Holding is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  472.00  in Lixiang Education Holding on December 29, 2024 and sell it today you would earn a total of  861.00  from holding Lixiang Education Holding or generate 182.42% return on investment over 90 days.

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

Golden Sun Education  vs.  Lixiang Education Holding

Golden Sun Education

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Sun Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Golden Sun displayed solid returns over the last few months and may actually be approaching a breakup point.

Lixiang Education Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lixiang Education Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, Lixiang Education demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Sun and Lixiang Education

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

The idea behind Golden Sun Education and Lixiang Education Holding 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.