Correlation Between Sunlands Technology and ATA Creativity

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

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

Diversification Opportunities for Sunlands Technology and ATA Creativity

0.44

Correlation Coefficient

Sunlands Technology  ATA Creativity

Very weak diversification

The 3 months correlation between Sunlands and ATA is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sunlands Technology Group 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 Sunlands Technology 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 Sunlands Technology Group 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 Sunlands Technology i.e., Sunlands Technology and ATA Creativity go up and down completely randomly.

Pair Corralation between Sunlands Technology and ATA Creativity

Considering the 90-day investment horizon Sunlands Technology is expected to generate 2.12 times less return on investment than ATA Creativity. In addition to that, Sunlands Technology is 1.26 times more volatile than ATA Creativity Global. It trades about 0.07 of its total potential returns per unit of risk. ATA Creativity Global is currently generating about 0.19 per unit of volatility. If you would invest  58.00  in ATA Creativity Global on September 1, 2024 and sell it today you would earn a total of  42.00  from holding ATA Creativity Global or generate 72.41% return on investment over 90 days.

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

Sunlands Technology Group  vs.  ATA Creativity Global

Sunlands Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sunlands Technology Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Sunlands Technology reported solid returns over the last few months and may actually be approaching a breakup point.

ATA Creativity Global

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATA Creativity Global are ranked lower than 14 (%) 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 Sunlands Technology and ATA Creativity

The main advantage of trading using opposite Sunlands Technology and ATA Creativity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunlands Technology 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 Sunlands Technology Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.