Correlation Between Wah Fu and Jianzhi Education

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

Diversification Opportunities for Wah Fu and Jianzhi Education

0.37

Correlation Coefficient

Wah Fu  Jianzhi Education

Weak diversification

The 3 months correlation between Wah and Jianzhi is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Wah Fu Education and Jianzhi Education Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jianzhi 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 Jianzhi Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jianzhi Education has no effect on the direction of Wah Fu i.e., Wah Fu and Jianzhi Education go up and down completely randomly.

Pair Corralation between Wah Fu and Jianzhi Education

Given the investment horizon of 90 days Wah Fu is expected to generate 1.58 times less return on investment than Jianzhi Education. In addition to that, Wah Fu is 1.2 times more volatile than Jianzhi Education Technology. It trades about 0.03 of its total potential returns per unit of risk. Jianzhi Education Technology is currently generating about 0.05 per unit of volatility. If you would invest  86.00  in Jianzhi Education Technology on December 27, 2024 and sell it today you would earn a total of  6.00  from holding Jianzhi Education Technology or generate 6.98% 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.  Jianzhi Education Technology

Wah Fu Education

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wah Fu Education are ranked lower than 2 (%) 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.

Jianzhi Education

Risk-Adjusted Performance

Weak

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

Pair Trading with Wah Fu and Jianzhi Education

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

The idea behind Wah Fu Education and Jianzhi Education Technology 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.