Correlation Between CHINA EDUCATION and MARKET VECTR

Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and MARKET VECTR 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 MARKET VECTR 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 MARKET VECTR RETAIL, you can compare the effects of market volatilities on CHINA EDUCATION and MARKET VECTR 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 MARKET VECTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and MARKET VECTR.

Diversification Opportunities for CHINA EDUCATION and MARKET VECTR

0.64

Correlation Coefficient

CHINA EDUCATION  MARKET VECTR

Poor diversification

The 3 months correlation between CHINA and MARKET is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and MARKET VECTR go up and down completely randomly.

Pair Corralation between CHINA EDUCATION and MARKET VECTR

Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 3.14 times more return on investment than MARKET VECTR. However, CHINA EDUCATION is 3.14 times more volatile than MARKET VECTR RETAIL. It trades about 0.08 of its potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about 0.08 per unit of risk. If you would invest  24.00  in CHINA EDUCATION GROUP on April 5, 2025 and sell it today you would earn a total of  4.00  from holding CHINA EDUCATION GROUP or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

CHINA EDUCATION GROUP  vs.  MARKET VECTR RETAIL

CHINA EDUCATION GROUP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA EDUCATION GROUP are ranked lower than 6 (%) 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.

MARKET VECTR RETAIL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MARKET VECTR RETAIL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, MARKET VECTR is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CHINA EDUCATION and MARKET VECTR

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

The idea behind CHINA EDUCATION GROUP and MARKET VECTR RETAIL 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.