Correlation Between QuantaSing Group and Cogna Educacao

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

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

Diversification Opportunities for QuantaSing Group and Cogna Educacao

-0.26

Correlation Coefficient

QuantaSing Group  Cogna Educacao

Very good diversification

The 3 months correlation between QuantaSing and Cogna is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding QuantaSing Group Limited and Cogna Educacao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogna Educacao SA and QuantaSing Group 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 QuantaSing Group Limited are associated (or correlated) with Cogna Educacao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogna Educacao SA has no effect on the direction of QuantaSing Group i.e., QuantaSing Group and Cogna Educacao go up and down completely randomly.

Pair Corralation between QuantaSing Group and Cogna Educacao

Considering the 90-day investment horizon QuantaSing Group Limited is expected to generate 1.61 times more return on investment than Cogna Educacao. However, QuantaSing Group is 1.61 times more volatile than Cogna Educacao SA. It trades about 0.12 of its potential returns per unit of risk. Cogna Educacao SA is currently generating about -0.04 per unit of risk. If you would invest  153.00  in QuantaSing Group Limited on September 14, 2024 and sell it today you would earn a total of  96.00  from holding QuantaSing Group Limited or generate 62.75% return on investment over 90 days.

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

QuantaSing Group Limited  vs.  Cogna Educacao SA

QuantaSing Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QuantaSing Group Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, QuantaSing Group reported solid returns over the last few months and may actually be approaching a breakup point.

Cogna Educacao SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogna Educacao SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with QuantaSing Group and Cogna Educacao

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

The idea behind QuantaSing Group Limited and Cogna Educacao SA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..