Correlation Between Adtalem Global and Coursera

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

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

Diversification Opportunities for Adtalem Global and Coursera

0.06

Correlation Coefficient

Adtalem Global  Coursera

Significant diversification

The 3 months correlation between Adtalem and Coursera is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and Coursera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coursera and Adtalem Global 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 Adtalem Global Education are associated (or correlated) with Coursera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coursera has no effect on the direction of Adtalem Global i.e., Adtalem Global and Coursera go up and down completely randomly.

Pair Corralation between Adtalem Global and Coursera

Given the investment horizon of 90 days Adtalem Global Education is expected to generate 0.73 times more return on investment than Coursera. However, Adtalem Global Education is 1.37 times less risky than Coursera. It trades about 0.15 of its potential returns per unit of risk. Coursera is currently generating about 0.06 per unit of risk. If you would invest  7,209  in Adtalem Global Education on September 12, 2024 and sell it today you would earn a total of  1,618  from holding Adtalem Global Education or generate 22.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Adtalem Global Education  vs.  Coursera

Adtalem Global Education

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Adtalem Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Coursera

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coursera are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Coursera may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Adtalem Global and Coursera

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

The idea behind Adtalem Global Education and Coursera 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.