Correlation Between Sunlands Technology and Legacy Education

Can any of the company-specific risk be diversified away by investing in both Sunlands Technology and Legacy 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 Sunlands Technology and Legacy Education 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 Legacy Education Alliance, you can compare the effects of market volatilities on Sunlands Technology and Legacy 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 Sunlands Technology with a short position of Legacy Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunlands Technology and Legacy Education.

Diversification Opportunities for Sunlands Technology and Legacy Education

0.11

Correlation Coefficient

Sunlands Technology  Legacy Education

Average diversification

The 3 months correlation between Sunlands and Legacy is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sunlands Technology Group and Legacy Education Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Education Alliance 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 Legacy Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Education Alliance has no effect on the direction of Sunlands Technology i.e., Sunlands Technology and Legacy Education go up and down completely randomly.

Pair Corralation between Sunlands Technology and Legacy Education

Considering the 90-day investment horizon Sunlands Technology is expected to generate 6.13 times less return on investment than Legacy Education. In addition to that, Sunlands Technology is 1.2 times more volatile than Legacy Education Alliance. It trades about 0.02 of its total potential returns per unit of risk. Legacy Education Alliance is currently generating about 0.13 per unit of volatility. If you would invest  0.03  in Legacy Education Alliance on December 28, 2024 and sell it today you would earn a total of  0.01  from holding Legacy Education Alliance or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Sunlands Technology Group  vs.  Legacy Education Alliance

Sunlands Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sunlands Technology Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sunlands Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Legacy Education Alliance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Legacy Education Alliance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Legacy Education demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunlands Technology and Legacy Education

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

The idea behind Sunlands Technology Group and Legacy Education Alliance 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..