Correlation Between Vasta Platform and China Liberal

Can any of the company-specific risk be diversified away by investing in both Vasta Platform and China Liberal 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 Vasta Platform and China Liberal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vasta Platform and China Liberal Education, you can compare the effects of market volatilities on Vasta Platform and China Liberal 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 Vasta Platform with a short position of China Liberal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vasta Platform and China Liberal.

Diversification Opportunities for Vasta Platform and China Liberal

-0.2

Correlation Coefficient

Vasta Platform  China Liberal

Good diversification

The 3 months correlation between Vasta and China is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vasta Platform and China Liberal Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Liberal Education and Vasta Platform 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 Vasta Platform are associated (or correlated) with China Liberal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Liberal Education has no effect on the direction of Vasta Platform i.e., Vasta Platform and China Liberal go up and down completely randomly.

Pair Corralation between Vasta Platform and China Liberal

Given the investment horizon of 90 days Vasta Platform is expected to generate 15.49 times less return on investment than China Liberal. But when comparing it to its historical volatility, Vasta Platform is 34.94 times less risky than China Liberal. It trades about 0.25 of its potential returns per unit of risk. China Liberal Education is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  365.00  in China Liberal Education on December 27, 2024 and sell it today you would lose (169.00) from holding China Liberal Education or give up 46.3% of portfolio value over 90 days.

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

Vasta Platform  vs.  China Liberal Education

Vasta Platform

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vasta Platform sustained solid returns over the last few months and may actually be approaching a breakup point.

China Liberal Education

Risk-Adjusted Performance

OK

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

Pair Trading with Vasta Platform and China Liberal

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

The idea behind Vasta Platform and China Liberal Education 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.