Correlation Between Scholastic and Gaxosai

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

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

Diversification Opportunities for Scholastic and Gaxosai

0.31

Correlation Coefficient

Scholastic  Gaxosai

Weak diversification

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

Pair Corralation between Scholastic and Gaxosai

Given the investment horizon of 90 days Scholastic is expected to under-perform the Gaxosai. But the stock apears to be less risky and, when comparing its historical volatility, Scholastic is 5.19 times less risky than Gaxosai. The stock trades about -0.1 of its potential returns per unit of risk. The Gaxosai is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  229.00  in Gaxosai on September 13, 2024 and sell it today you would earn a total of  278.00  from holding Gaxosai or generate 121.4% return on investment over 90 days.

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

Scholastic  vs.  Gaxosai

Scholastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scholastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Gaxosai

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gaxosai are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Gaxosai demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scholastic and Gaxosai

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

The idea behind Scholastic and Gaxosai 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..