Correlation Between Puxin and Gaotu Techedu

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

By analyzing existing cross correlation between Puxin Limited and Gaotu Techedu DRC, you can compare the effects of market volatilities on Puxin and Gaotu Techedu 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 Puxin with a short position of Gaotu Techedu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puxin and Gaotu Techedu.

Diversification Opportunities for Puxin and Gaotu Techedu

-0.03

Correlation Coefficient

Puxin  Gaotu Techedu

Good diversification

The 3 months correlation between Puxin and Gaotu is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Puxin Limited and Gaotu Techedu DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaotu Techedu DRC and Puxin 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 Puxin Limited are associated (or correlated) with Gaotu Techedu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaotu Techedu DRC has no effect on the direction of Puxin i.e., Puxin and Gaotu Techedu go up and down completely randomly.

Pair Corralation between Puxin and Gaotu Techedu

If you would invest  1.70  in Puxin Limited on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Puxin Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Puxin Limited  vs.  Gaotu Techedu DRC

Puxin Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Puxin Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Puxin is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Gaotu Techedu DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaotu Techedu DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gaotu Techedu is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Puxin and Gaotu Techedu

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

The idea behind Puxin Limited and Gaotu Techedu DRC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.