Correlation Between Lixiang Education and Golden Sun

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

Diversification Opportunities for Lixiang Education and Golden Sun

0.33

Correlation Coefficient

Lixiang Education  Golden Sun

Weak diversification

The 3 months correlation between Lixiang and Golden is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lixiang Education Holding and Golden Sun Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Sun 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 Golden Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Sun Education has no effect on the direction of Lixiang Education i.e., Lixiang Education and Golden Sun go up and down completely randomly.

Pair Corralation between Lixiang Education and Golden Sun

Given the investment horizon of 90 days Lixiang Education Holding is expected to generate 2.41 times more return on investment than Golden Sun. However, Lixiang Education is 2.41 times more volatile than Golden Sun Education. It trades about 0.18 of its potential returns per unit of risk. Golden Sun Education is currently generating about 0.08 per unit of risk. If you would invest  472.00  in Lixiang Education Holding on December 29, 2024 and sell it today you would earn a total of  861.00  from holding Lixiang Education Holding or generate 182.42% return on investment over 90 days.

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

Lixiang Education Holding  vs.  Golden Sun Education

Lixiang Education Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lixiang Education Holding are ranked lower than 14 (%) 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.

Golden Sun Education

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Sun Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Golden Sun displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lixiang Education and Golden Sun

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

The idea behind Lixiang Education Holding and Golden Sun 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.