Correlation Between IDP Education and Puxin

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

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

Diversification Opportunities for IDP Education and Puxin

-0.33

Correlation Coefficient

IDP Education  Puxin

Very good diversification

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

Pair Corralation between IDP Education and Puxin

If you would invest  1.70  in Puxin Limited on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Puxin Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.44%
Values	Daily Returns

IDP Education Limited  vs.  Puxin Limited

IDP Education Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDP Education Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Puxin Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Puxin Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Puxin is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IDP Education and Puxin

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

The idea behind IDP Education Limited and Puxin Limited 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.