Correlation Between G8 EDUCATION and H2O Retailing

Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and H2O Retailing 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 G8 EDUCATION and H2O Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G8 EDUCATION and H2O Retailing, you can compare the effects of market volatilities on G8 EDUCATION and H2O Retailing 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 G8 EDUCATION with a short position of H2O Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and H2O Retailing.

Diversification Opportunities for G8 EDUCATION and H2O Retailing

0.61

Correlation Coefficient

G8 EDUCATION  H2O Retailing

Poor diversification

The 3 months correlation between 3EAG and H2O is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and H2O Retailing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H2O Retailing and G8 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 G8 EDUCATION are associated (or correlated) with H2O Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H2O Retailing has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and H2O Retailing go up and down completely randomly.

Pair Corralation between G8 EDUCATION and H2O Retailing

Assuming the 90 days trading horizon G8 EDUCATION is expected to under-perform the H2O Retailing. In addition to that, G8 EDUCATION is 1.09 times more volatile than H2O Retailing. It trades about -0.25 of its total potential returns per unit of risk. H2O Retailing is currently generating about -0.04 per unit of volatility. If you would invest  1,160  in H2O Retailing on April 20, 2025 and sell it today you would lose (60.00) from holding H2O Retailing or give up 5.17% of portfolio value over 90 days.

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

G8 EDUCATION  vs.  H2O Retailing

G8 EDUCATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days G8 EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

H2O Retailing

Risk-Adjusted Performance

Very Weak

Over the last 90 days H2O Retailing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H2O Retailing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with G8 EDUCATION and H2O Retailing

The main advantage of trading using opposite G8 EDUCATION and H2O Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, H2O Retailing 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 H2O Retailing will offset losses from the drop in H2O Retailing's long position.

The idea behind G8 EDUCATION and H2O Retailing 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.