Correlation Between Lincoln Educational and Graphjet Technology

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

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

Diversification Opportunities for Lincoln Educational and Graphjet Technology

-0.1

Correlation Coefficient

Lincoln Educational  Graphjet Technology

Good diversification

The 3 months correlation between Lincoln and Graphjet is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Graphjet Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphjet Technology and Lincoln Educational 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 Lincoln Educational Services are associated (or correlated) with Graphjet Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphjet Technology has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Graphjet Technology go up and down completely randomly.

Pair Corralation between Lincoln Educational and Graphjet Technology

Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 0.16 times more return on investment than Graphjet Technology. However, Lincoln Educational Services is 6.24 times less risky than Graphjet Technology. It trades about 0.08 of its potential returns per unit of risk. Graphjet Technology is currently generating about 0.01 per unit of risk. If you would invest  605.00  in Lincoln Educational Services on October 10, 2024 and sell it today you would earn a total of  889.00  from holding Lincoln Educational Services or generate 146.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.15%
Values	Daily Returns

Lincoln Educational Services  vs.  Graphjet Technology

Lincoln Educational

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lincoln Educational exhibited solid returns over the last few months and may actually be approaching a breakup point.

Graphjet Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graphjet Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Graphjet Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lincoln Educational and Graphjet Technology

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

The idea behind Lincoln Educational Services and Graphjet Technology 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.