Correlation Between QuantaSing Group and Lixiang Education

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

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

Diversification Opportunities for QuantaSing Group and Lixiang Education

0.45

Correlation Coefficient

QuantaSing Group  Lixiang Education

Very weak diversification

The 3 months correlation between QuantaSing and Lixiang is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding QuantaSing Group Limited and Lixiang Education Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixiang Education Holding and QuantaSing Group 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 QuantaSing Group Limited are associated (or correlated) with Lixiang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixiang Education Holding has no effect on the direction of QuantaSing Group i.e., QuantaSing Group and Lixiang Education go up and down completely randomly.

Pair Corralation between QuantaSing Group and Lixiang Education

Considering the 90-day investment horizon QuantaSing Group Limited is expected to generate 0.98 times more return on investment than Lixiang Education. However, QuantaSing Group Limited is 1.02 times less risky than Lixiang Education. It trades about 0.13 of its potential returns per unit of risk. Lixiang Education Holding is currently generating about 0.05 per unit of risk. If you would invest  160.00  in QuantaSing Group Limited on September 2, 2024 and sell it today you would earn a total of  108.00  from holding QuantaSing Group Limited or generate 67.5% return on investment over 90 days.

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

QuantaSing Group Limited  vs.  Lixiang Education Holding

QuantaSing Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QuantaSing Group Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, QuantaSing Group reported solid returns over the last few months and may actually be approaching a breakup point.

Lixiang Education Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lixiang Education Holding are ranked lower than 3 (%) 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.

Pair Trading with QuantaSing Group and Lixiang Education

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

The idea behind QuantaSing Group Limited and Lixiang Education Holding 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.