Correlation Between Wah Fu and Stride

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

Diversification Opportunities for Wah Fu and Stride

0.41

Correlation Coefficient

Wah Fu  Stride

Very weak diversification

The 3 months correlation between Wah and Stride is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Wah Fu Education and Stride Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stride Inc 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 Stride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stride Inc has no effect on the direction of Wah Fu i.e., Wah Fu and Stride go up and down completely randomly.

Pair Corralation between Wah Fu and Stride

Given the investment horizon of 90 days Wah Fu is expected to generate 1.13 times less return on investment than Stride. In addition to that, Wah Fu is 4.31 times more volatile than Stride Inc. It trades about 0.03 of its total potential returns per unit of risk. Stride Inc is currently generating about 0.15 per unit of volatility. If you would invest  10,546  in Stride Inc on December 28, 2024 and sell it today you would earn a total of  2,007  from holding Stride Inc or generate 19.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Wah Fu Education  vs.  Stride Inc

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.

Stride Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stride Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Stride displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wah Fu and Stride

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

The idea behind Wah Fu Education and Stride 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.