Correlation Between Perdoceo Education and ATA Creativity

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

By analyzing existing cross correlation between Perdoceo Education Corp and ATA Creativity Global, you can compare the effects of market volatilities on Perdoceo Education and ATA Creativity 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 Perdoceo Education with a short position of ATA Creativity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perdoceo Education and ATA Creativity.

Diversification Opportunities for Perdoceo Education and ATA Creativity

0.18

Correlation Coefficient

Perdoceo Education  ATA Creativity

Average diversification

The 3 months correlation between Perdoceo and ATA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Perdoceo Education Corp and ATA Creativity Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATA Creativity Global and Perdoceo 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 Perdoceo Education Corp are associated (or correlated) with ATA Creativity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATA Creativity Global has no effect on the direction of Perdoceo Education i.e., Perdoceo Education and ATA Creativity go up and down completely randomly.

Pair Corralation between Perdoceo Education and ATA Creativity

Given the investment horizon of 90 days Perdoceo Education Corp is expected to generate 1.12 times more return on investment than ATA Creativity. However, Perdoceo Education is 1.12 times more volatile than ATA Creativity Global. It trades about 0.17 of its potential returns per unit of risk. ATA Creativity Global is currently generating about -0.13 per unit of risk. If you would invest  2,128  in Perdoceo Education Corp on September 23, 2024 and sell it today you would earn a total of  484.00  from holding Perdoceo Education Corp or generate 22.74% return on investment over 90 days.

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

Perdoceo Education Corp  vs.  ATA Creativity Global

Perdoceo Education Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perdoceo Education Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Perdoceo Education displayed solid returns over the last few months and may actually be approaching a breakup point.

ATA Creativity Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATA Creativity Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, ATA Creativity reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perdoceo Education and ATA Creativity

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

The idea behind Perdoceo Education Corp and ATA Creativity Global 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.