Correlation Between Sunlands Technology and Scholastic

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

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

Diversification Opportunities for Sunlands Technology and Scholastic

0.17

Correlation Coefficient

Sunlands Technology  Scholastic

Average diversification

The 3 months correlation between Sunlands and Scholastic is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sunlands Technology Group and Scholastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scholastic and Sunlands Technology 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 Sunlands Technology Group are associated (or correlated) with Scholastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scholastic has no effect on the direction of Sunlands Technology i.e., Sunlands Technology and Scholastic go up and down completely randomly.

Pair Corralation between Sunlands Technology and Scholastic

Considering the 90-day investment horizon Sunlands Technology Group is expected to under-perform the Scholastic. In addition to that, Sunlands Technology is 2.0 times more volatile than Scholastic. It trades about -0.29 of its total potential returns per unit of risk. Scholastic is currently generating about -0.1 per unit of volatility. If you would invest  3,771  in Scholastic on January 28, 2024 and sell it today you would lose (129.00) from holding Scholastic or give up 3.42% of portfolio value over 90 days.

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

Sunlands Technology Group  vs.  Scholastic

Sunlands Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunlands Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 latest uncertain performance, the Stock's technical indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Sunlands Technology and Scholastic

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

The idea behind Sunlands Technology Group and Scholastic 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.