Correlation Between Grand Canyon and QuantaSing Group

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

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

Diversification Opportunities for Grand Canyon and QuantaSing Group

0.08

Correlation Coefficient

Grand Canyon  QuantaSing Group

Significant diversification

The 3 months correlation between Grand and QuantaSing is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and QuantaSing Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuantaSing Group and Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and QuantaSing Group go up and down completely randomly.

Pair Corralation between Grand Canyon and QuantaSing Group

Given the investment horizon of 90 days Grand Canyon Education is expected to generate 0.54 times more return on investment than QuantaSing Group. However, Grand Canyon Education is 1.87 times less risky than QuantaSing Group. It trades about 0.25 of its potential returns per unit of risk. QuantaSing Group Limited is currently generating about -0.08 per unit of risk. If you would invest  13,735  in Grand Canyon Education on August 31, 2024 and sell it today you would earn a total of  2,744  from holding Grand Canyon Education or generate 19.98% return on investment over 90 days.

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

Grand Canyon Education  vs.  QuantaSing Group Limited

Grand Canyon Education

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Grand Canyon exhibited 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 Grand Canyon and QuantaSing Group

The main advantage of trading using opposite Grand Canyon and QuantaSing Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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 Grand Canyon Education 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.