Correlation Between Laureate Education and PICKN PAY

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Can any of the company-specific risk be diversified away by investing in both Laureate Education and PICKN PAY 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 Laureate Education and PICKN PAY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and PICKN PAY STORES, you can compare the effects of market volatilities on Laureate Education and PICKN PAY 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 Laureate Education with a short position of PICKN PAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and PICKN PAY.

Diversification Opportunities for Laureate Education and PICKN PAY

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Laureate and PICKN is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and PICKN PAY STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICKN PAY STORES and Laureate 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 Laureate Education are associated (or correlated) with PICKN PAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICKN PAY STORES has no effect on the direction of Laureate Education i.e., Laureate Education and PICKN PAY go up and down completely randomly.

Pair Corralation between Laureate Education and PICKN PAY

Assuming the 90 days trading horizon Laureate Education is expected to generate 16.41 times less return on investment than PICKN PAY. But when comparing it to its historical volatility, Laureate Education is 1.69 times less risky than PICKN PAY. It trades about 0.03 of its potential returns per unit of risk. PICKN PAY STORES is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  127.00  in PICKN PAY STORES on October 10, 2024 and sell it today you would earn a total of  32.00  from holding PICKN PAY STORES or generate 25.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Laureate Education  vs.  PICKN PAY STORES

 Performance 
       Timeline  
Laureate Education 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Laureate Education are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Laureate Education reported solid returns over the last few months and may actually be approaching a breakup point.
PICKN PAY STORES 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PICKN PAY STORES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PICKN PAY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Laureate Education and PICKN PAY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Laureate Education and PICKN PAY

The main advantage of trading using opposite Laureate Education and PICKN PAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, PICKN PAY 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 PICKN PAY will offset losses from the drop in PICKN PAY's long position.
The idea behind Laureate Education and PICKN PAY STORES 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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