Correlation Between Ambow Education and Vasta Platform

Can any of the company-specific risk be diversified away by investing in both Ambow Education and Vasta Platform 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 Ambow Education and Vasta Platform into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Ambow Education and Vasta Platform

0.05

Correlation Coefficient

Ambow Education  Vasta Platform

Significant diversification

The 3 months correlation between Ambow and Vasta is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding and Vasta Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vasta Platform and Ambow 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 Ambow Education Holding are associated (or correlated) with Vasta Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vasta Platform has no effect on the direction of Ambow Education i.e., Ambow Education and Vasta Platform go up and down completely randomly.

Pair Corralation between Ambow Education and Vasta Platform

Given the investment horizon of 90 days Ambow Education Holding is expected to generate 15.03 times more return on investment than Vasta Platform. However, Ambow Education is 15.03 times more volatile than Vasta Platform. It trades about 0.1 of its potential returns per unit of risk. Vasta Platform is currently generating about -0.06 per unit of risk. If you would invest  114.00  in Ambow Education Holding on September 5, 2024 and sell it today you would earn a total of  78.00  from holding Ambow Education Holding or generate 68.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ambow Education Holding  vs.  Vasta Platform

Ambow Education Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ambow Education Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Ambow Education displayed solid returns over the last few months and may actually be approaching a breakup point.

Vasta Platform

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vasta Platform has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ambow Education and Vasta Platform

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

The idea behind Ambow Education Holding and Vasta Platform 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.