Correlation Between Wah Fu and Adtalem Global

Can any of the company-specific risk be diversified away by investing in both Wah Fu and Adtalem Global 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 Wah Fu and Adtalem Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Wah Fu and Adtalem Global

0.39

Correlation Coefficient

Wah Fu  Adtalem Global

Weak diversification

The 3 months correlation between Wah and Adtalem is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wah Fu Education and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education and Wah Fu 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 Wah Fu Education are associated (or correlated) with Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of Wah Fu i.e., Wah Fu and Adtalem Global go up and down completely randomly.

Pair Corralation between Wah Fu and Adtalem Global

Given the investment horizon of 90 days Wah Fu Education is expected to generate 4.07 times more return on investment than Adtalem Global. However, Wah Fu is 4.07 times more volatile than Adtalem Global Education. It trades about 0.07 of its potential returns per unit of risk. Adtalem Global Education is currently generating about 0.08 per unit of risk. If you would invest  160.00  in Wah Fu Education on December 5, 2024 and sell it today you would earn a total of  34.00  from holding Wah Fu Education or generate 21.25% return on investment over 90 days.

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

Wah Fu Education  vs.  Adtalem Global Education

Wah Fu Education

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wah Fu Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Wah Fu unveiled solid returns over the last few months and may actually be approaching a breakup point.

Adtalem Global Education

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Adtalem Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wah Fu and Adtalem Global

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

The idea behind Wah Fu Education and Adtalem Global 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.