Correlation Between Golden Sun and Strategic Education

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

Diversification Opportunities for Golden Sun and Strategic Education

-0.33

Correlation Coefficient

Golden Sun  Strategic Education

Very good diversification

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

Pair Corralation between Golden Sun and Strategic Education

Given the investment horizon of 90 days Golden Sun Education is expected to generate 2.95 times more return on investment than Strategic Education. However, Golden Sun is 2.95 times more volatile than Strategic Education. It trades about 0.02 of its potential returns per unit of risk. Strategic Education is currently generating about -0.14 per unit of risk. If you would invest  280.00  in Golden Sun Education on September 27, 2024 and sell it today you would lose (1.00) from holding Golden Sun Education or give up 0.36% of portfolio value over 90 days.

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

Golden Sun Education  vs.  Strategic 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.

Strategic Education

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Strategic Education is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Golden Sun and Strategic Education

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

The idea behind Golden Sun Education and Strategic 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.