Correlation Between EMBARK EDUCATION and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both EMBARK EDUCATION and CHINA HUARONG 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 EMBARK EDUCATION and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMBARK EDUCATION LTD and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on EMBARK EDUCATION and CHINA HUARONG 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 EMBARK EDUCATION with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBARK EDUCATION and CHINA HUARONG.
Diversification Opportunities for EMBARK EDUCATION and CHINA HUARONG
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EMBARK and CHINA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding EMBARK EDUCATION LTD and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD and EMBARK EDUCATION 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 EMBARK EDUCATION LTD are associated (or correlated) with CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of EMBARK EDUCATION i.e., EMBARK EDUCATION and CHINA HUARONG go up and down completely randomly.
Pair Corralation between EMBARK EDUCATION and CHINA HUARONG
Assuming the 90 days horizon EMBARK EDUCATION is expected to generate 79.47 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, EMBARK EDUCATION LTD is 69.39 times less risky than CHINA HUARONG. It trades about 0.13 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.05 in CHINA HUARONG ENERHD 50 on September 26, 2024 and sell it today you would earn a total of 0.10 from holding CHINA HUARONG ENERHD 50 or generate 200.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
EMBARK EDUCATION LTD vs. CHINA HUARONG ENERHD 50
Performance |
Timeline |
EMBARK EDUCATION LTD |
CHINA HUARONG ENERHD |
EMBARK EDUCATION and CHINA HUARONG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EMBARK EDUCATION and CHINA HUARONG
The main advantage of trading using opposite EMBARK EDUCATION and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMBARK EDUCATION position performs unexpectedly, CHINA HUARONG 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 HUARONG will offset losses from the drop in CHINA HUARONG's long position.EMBARK EDUCATION vs. IDP EDUCATION LTD | EMBARK EDUCATION vs. TAL Education Group | EMBARK EDUCATION vs. Grand Canyon Education | EMBARK EDUCATION vs. Graham Holdings Co |
CHINA HUARONG vs. Xinhua Winshare Publishing | CHINA HUARONG vs. Adtalem Global Education | CHINA HUARONG vs. EMBARK EDUCATION LTD | CHINA HUARONG vs. CAREER EDUCATION |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |