Correlation Between CHINA EDUCATION and G8 EDUCATION

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

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

Diversification Opportunities for CHINA EDUCATION and G8 EDUCATION

-0.61

Correlation Coefficient

CHINA EDUCATION  G8 EDUCATION

Excellent diversification

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

Pair Corralation between CHINA EDUCATION and G8 EDUCATION

Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 0.79 times more return on investment than G8 EDUCATION. However, CHINA EDUCATION GROUP is 1.27 times less risky than G8 EDUCATION. It trades about 0.32 of its potential returns per unit of risk. G8 EDUCATION is currently generating about -0.46 per unit of risk. If you would invest  27.00  in CHINA EDUCATION GROUP on April 20, 2025 and sell it today you would earn a total of  4.00  from holding CHINA EDUCATION GROUP or generate 14.81% return on investment over 90 days.

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

CHINA EDUCATION GROUP  vs.  G8 EDUCATION

CHINA EDUCATION GROUP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA EDUCATION GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA EDUCATION reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with CHINA EDUCATION and G8 EDUCATION

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

The idea behind CHINA EDUCATION GROUP and G8 EDUCATION 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.