Correlation Between 51Talk Online and Lincoln Educational

Can any of the company-specific risk be diversified away by investing in both 51Talk Online and Lincoln Educational 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 51Talk Online and Lincoln Educational into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 51Talk Online Education and Lincoln Educational Services, you can compare the effects of market volatilities on 51Talk Online and Lincoln Educational 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 51Talk Online with a short position of Lincoln Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of 51Talk Online and Lincoln Educational.

Diversification Opportunities for 51Talk Online and Lincoln Educational

-0.02

Correlation Coefficient

51Talk Online  Lincoln Educational

Good diversification

The 3 months correlation between 51Talk and Lincoln is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding 51Talk Online Education and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational and 51Talk Online 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 51Talk Online Education are associated (or correlated) with Lincoln Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Educational has no effect on the direction of 51Talk Online i.e., 51Talk Online and Lincoln Educational go up and down completely randomly.

Pair Corralation between 51Talk Online and Lincoln Educational

Considering the 90-day investment horizon 51Talk Online is expected to generate 1.71 times less return on investment than Lincoln Educational. In addition to that, 51Talk Online is 1.81 times more volatile than Lincoln Educational Services. It trades about 0.05 of its total potential returns per unit of risk. Lincoln Educational Services is currently generating about 0.16 per unit of volatility. If you would invest  1,210  in Lincoln Educational Services on September 24, 2024 and sell it today you would earn a total of  327.00  from holding Lincoln Educational Services or generate 27.02% return on investment over 90 days.

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

51Talk Online Education  vs.  Lincoln Educational Services

51Talk Online Education

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, 51Talk Online exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lincoln Educational

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with 51Talk Online and Lincoln Educational

The main advantage of trading using opposite 51Talk Online and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 51Talk Online position performs unexpectedly, Lincoln Educational 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 Lincoln Educational will offset losses from the drop in Lincoln Educational's long position.

The idea behind 51Talk Online Education and Lincoln Educational Services 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.