Correlation Between Elite Education and QuantaSing Group

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

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

Diversification Opportunities for Elite Education and QuantaSing Group

0.31

Correlation Coefficient

Elite Education  QuantaSing Group

Weak diversification

The 3 months correlation between Elite and QuantaSing is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and QuantaSing Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuantaSing Group and Elite 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 Elite Education Group are associated (or correlated) with QuantaSing Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuantaSing Group has no effect on the direction of Elite Education i.e., Elite Education and QuantaSing Group go up and down completely randomly.

Pair Corralation between Elite Education and QuantaSing Group

Given the investment horizon of 90 days Elite Education is expected to generate 1.95 times less return on investment than QuantaSing Group. But when comparing it to its historical volatility, Elite Education Group is 1.84 times less risky than QuantaSing Group. It trades about 0.13 of its potential returns per unit of risk. QuantaSing Group Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  160.00  in QuantaSing Group Limited on August 31, 2024 and sell it today you would earn a total of  125.00  from holding QuantaSing Group Limited or generate 78.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Elite Education Group  vs.  QuantaSing Group Limited

Elite Education Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Education Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Elite Education reported solid returns over the last few months and may actually be approaching a breakup point.

QuantaSing Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QuantaSing Group Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, QuantaSing Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elite Education and QuantaSing Group

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

The idea behind Elite Education Group and QuantaSing Group Limited 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.