Correlation Between Jianzhi Education and Gaotu Techedu

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

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

Diversification Opportunities for Jianzhi Education and Gaotu Techedu

0.31

Correlation Coefficient

Jianzhi Education  Gaotu Techedu

Weak diversification

The 3 months correlation between Jianzhi and Gaotu is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jianzhi Education Technology and Gaotu Techedu DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaotu Techedu DRC and Jianzhi 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 Jianzhi Education Technology are associated (or correlated) with Gaotu Techedu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaotu Techedu DRC has no effect on the direction of Jianzhi Education i.e., Jianzhi Education and Gaotu Techedu go up and down completely randomly.

Pair Corralation between Jianzhi Education and Gaotu Techedu

Allowing for the 90-day total investment horizon Jianzhi Education Technology is expected to generate 1.47 times more return on investment than Gaotu Techedu. However, Jianzhi Education is 1.47 times more volatile than Gaotu Techedu DRC. It trades about -0.04 of its potential returns per unit of risk. Gaotu Techedu DRC is currently generating about -0.14 per unit of risk. If you would invest  111.00  in Jianzhi Education Technology on September 26, 2024 and sell it today you would lose (29.00) from holding Jianzhi Education Technology or give up 26.13% of portfolio value over 90 days.

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

Jianzhi Education Technology  vs.  Gaotu Techedu DRC

Jianzhi Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gaotu Techedu DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaotu Techedu DRC 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Jianzhi Education and Gaotu Techedu

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

The idea behind Jianzhi Education Technology and Gaotu Techedu DRC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.