Correlation Between Sunlands Technology and Udemy

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

Diversification Opportunities for Sunlands Technology and Udemy

-0.09

Correlation Coefficient

Sunlands Technology  Udemy

Good diversification

The 3 months correlation between Sunlands and Udemy is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sunlands Technology Group and Udemy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Udemy Inc 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 Udemy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Udemy Inc has no effect on the direction of Sunlands Technology i.e., Sunlands Technology and Udemy go up and down completely randomly.

Pair Corralation between Sunlands Technology and Udemy

Considering the 90-day investment horizon Sunlands Technology Group is expected to under-perform the Udemy. In addition to that, Sunlands Technology is 1.13 times more volatile than Udemy Inc. It trades about -0.02 of its total potential returns per unit of risk. Udemy Inc is currently generating about 0.05 per unit of volatility. If you would invest  790.00  in Udemy Inc on December 20, 2024 and sell it today you would earn a total of  66.00  from holding Udemy Inc or generate 8.35% return on investment over 90 days.

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

Sunlands Technology Group  vs.  Udemy Inc

Sunlands Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunlands Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Udemy Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Udemy Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Udemy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunlands Technology and Udemy

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

The idea behind Sunlands Technology Group and Udemy Inc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.