Correlation Between Learning Technologies and Made Tech

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

By analyzing existing cross correlation between Learning Technologies Group and Made Tech Group, you can compare the effects of market volatilities on Learning Technologies and Made Tech 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 Learning Technologies with a short position of Made Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Learning Technologies and Made Tech.

Diversification Opportunities for Learning Technologies and Made Tech

0.55

Correlation Coefficient

Learning Technologies  Made Tech

Very weak diversification

The 3 months correlation between Learning and Made is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Learning Technologies Group and Made Tech Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Made Tech Group and Learning Technologies 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 Learning Technologies Group are associated (or correlated) with Made Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Made Tech Group has no effect on the direction of Learning Technologies i.e., Learning Technologies and Made Tech go up and down completely randomly.

Pair Corralation between Learning Technologies and Made Tech

Assuming the 90 days trading horizon Learning Technologies is expected to generate 2.08 times less return on investment than Made Tech. But when comparing it to its historical volatility, Learning Technologies Group is 1.68 times less risky than Made Tech. It trades about 0.05 of its potential returns per unit of risk. Made Tech Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,375  in Made Tech Group on October 9, 2024 and sell it today you would earn a total of  1,050  from holding Made Tech Group or generate 76.36% return on investment over 90 days.

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

Learning Technologies Group  vs.  Made Tech Group

Learning Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Learning Technologies Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Learning Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Made Tech Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Made Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Learning Technologies and Made Tech

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

The idea behind Learning Technologies Group and Made Tech Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.