Correlation Between Visionary Education and Lixiang Education

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

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

Diversification Opportunities for Visionary Education and Lixiang Education

0.09

Correlation Coefficient

Visionary Education  Lixiang Education

Significant diversification

The 3 months correlation between Visionary and Lixiang is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visionary Education Technology 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 Visionary 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 Visionary Education Technology 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 Visionary Education i.e., Visionary Education and Lixiang Education go up and down completely randomly.

Pair Corralation between Visionary Education and Lixiang Education

Allowing for the 90-day total investment horizon Visionary Education is expected to generate 7.71 times less return on investment than Lixiang Education. In addition to that, Visionary Education is 1.36 times more volatile than Lixiang Education Holding. It trades about 0.04 of its total potential returns per unit of risk. Lixiang Education Holding is currently generating about 0.41 per unit of volatility. If you would invest  240.00  in Lixiang Education Holding on September 26, 2024 and sell it today you would earn a total of  287.00  from holding Lixiang Education Holding or generate 119.58% return on investment over 90 days.

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

Visionary Education Technology  vs.  Lixiang Education Holding

Visionary Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visionary Education Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Lixiang Education Holding

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lixiang Education Holding are ranked lower than 10 (%) 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 Visionary Education and Lixiang Education

The main advantage of trading using opposite Visionary Education and Lixiang Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visionary Education 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 Visionary Education Technology 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.