Correlation Between Lixiang Education and 51Talk Online

Can any of the company-specific risk be diversified away by investing in both Lixiang Education and 51Talk Online 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 Lixiang Education and 51Talk Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lixiang Education Holding and 51Talk Online Education, you can compare the effects of market volatilities on Lixiang Education and 51Talk Online 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 Lixiang Education with a short position of 51Talk Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lixiang Education and 51Talk Online.

Diversification Opportunities for Lixiang Education and 51Talk Online

0.78

Correlation Coefficient

Lixiang Education  51Talk Online

Poor diversification

The 3 months correlation between Lixiang and 51Talk is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lixiang Education Holding and 51Talk Online Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 51Talk Online Education and Lixiang 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 Lixiang Education Holding are associated (or correlated) with 51Talk Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 51Talk Online Education has no effect on the direction of Lixiang Education i.e., Lixiang Education and 51Talk Online go up and down completely randomly.

Pair Corralation between Lixiang Education and 51Talk Online

Given the investment horizon of 90 days Lixiang Education is expected to generate 1.79 times less return on investment than 51Talk Online. In addition to that, Lixiang Education is 2.51 times more volatile than 51Talk Online Education. It trades about 0.02 of its total potential returns per unit of risk. 51Talk Online Education is currently generating about 0.08 per unit of volatility. If you would invest  600.00  in 51Talk Online Education on October 13, 2024 and sell it today you would earn a total of  1,451  from holding 51Talk Online Education or generate 241.83% return on investment over 90 days.

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

Lixiang Education Holding  vs.  51Talk Online Education

Lixiang Education Holding

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lixiang Education Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, Lixiang Education demonstrated solid returns over the last few months and may actually be approaching a breakup point.

51Talk Online Education

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, 51Talk Online exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lixiang Education and 51Talk Online

The main advantage of trading using opposite Lixiang Education and 51Talk Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lixiang Education position performs unexpectedly, 51Talk Online 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 51Talk Online will offset losses from the drop in 51Talk Online's long position.

The idea behind Lixiang Education Holding and 51Talk Online Education 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.