Correlation Between Lincoln Educational and Ihuman

Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and Ihuman 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 Ihuman 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 Ihuman Inc, you can compare the effects of market volatilities on Lincoln Educational and Ihuman 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 Ihuman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and Ihuman.

Diversification Opportunities for Lincoln Educational and Ihuman

-0.34

Correlation Coefficient

Lincoln Educational  Ihuman

Very good diversification

The 3 months correlation between Lincoln and Ihuman is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Ihuman Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ihuman Inc 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 Ihuman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ihuman Inc has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Ihuman go up and down completely randomly.

Pair Corralation between Lincoln Educational and Ihuman

Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 0.6 times more return on investment than Ihuman. However, Lincoln Educational Services is 1.68 times less risky than Ihuman. It trades about 0.23 of its potential returns per unit of risk. Ihuman Inc is currently generating about 0.02 per unit of risk. If you would invest  1,178  in Lincoln Educational Services on September 1, 2024 and sell it today you would earn a total of  465.00  from holding Lincoln Educational Services or generate 39.47% return on investment over 90 days.

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

Lincoln Educational Services  vs.  Ihuman Inc

Lincoln Educational

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Lincoln Educational exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ihuman Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Ihuman is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Lincoln Educational and Ihuman

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

The idea behind Lincoln Educational Services and Ihuman Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.