Correlation Between Wah Fu and Gaotu Techedu
Can any of the company-specific risk be diversified away by investing in both Wah Fu and Gaotu Techedu 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 Gaotu Techedu 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 Gaotu Techedu DRC, you can compare the effects of market volatilities on Wah Fu and Gaotu Techedu 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 Gaotu Techedu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Fu and Gaotu Techedu.
Diversification Opportunities for Wah Fu and Gaotu Techedu
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wah and Gaotu is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wah Fu Education and Gaotu Techedu DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaotu Techedu DRC 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 Gaotu Techedu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaotu Techedu DRC has no effect on the direction of Wah Fu i.e., Wah Fu and Gaotu Techedu go up and down completely randomly.
Pair Corralation between Wah Fu and Gaotu Techedu
Given the investment horizon of 90 days Wah Fu Education is expected to generate 1.43 times more return on investment than Gaotu Techedu. However, Wah Fu is 1.43 times more volatile than Gaotu Techedu DRC. It trades about 0.08 of its potential returns per unit of risk. Gaotu Techedu DRC is currently generating about 0.08 per unit of risk. If you would invest 170.00 in Wah Fu Education on December 2, 2024 and sell it today you would earn a total of 44.00 from holding Wah Fu Education or generate 25.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Wah Fu Education vs. Gaotu Techedu DRC
Performance |
Timeline |
Wah Fu Education |
Gaotu Techedu DRC |
Wah Fu and Gaotu Techedu Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wah Fu and Gaotu Techedu
The main advantage of trading using opposite Wah Fu and Gaotu Techedu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Fu position performs unexpectedly, Gaotu Techedu 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 Gaotu Techedu will offset losses from the drop in Gaotu Techedu's long position.Wah Fu vs. Four Seasons Education | Wah Fu vs. Sunlands Technology Group | Wah Fu vs. 51Talk Online Education | Wah Fu vs. Golden Sun Education |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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