Correlation Between Four Seasons and Graham Holdings
Can any of the company-specific risk be diversified away by investing in both Four Seasons and Graham Holdings 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 Four Seasons and Graham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Four Seasons Education and Graham Holdings Co, you can compare the effects of market volatilities on Four Seasons and Graham Holdings 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 Four Seasons with a short position of Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Seasons and Graham Holdings.
Diversification Opportunities for Four Seasons and Graham Holdings
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Four and Graham is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings and Four Seasons 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 Four Seasons Education are associated (or correlated) with Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of Four Seasons i.e., Four Seasons and Graham Holdings go up and down completely randomly.
Pair Corralation between Four Seasons and Graham Holdings
Given the investment horizon of 90 days Four Seasons Education is expected to under-perform the Graham Holdings. In addition to that, Four Seasons is 4.14 times more volatile than Graham Holdings Co. It trades about -0.25 of its total potential returns per unit of risk. Graham Holdings Co is currently generating about -0.22 per unit of volatility. If you would invest 74,329 in Graham Holdings Co on January 24, 2024 and sell it today you would lose (4,254) from holding Graham Holdings Co or give up 5.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 60.0% |
| Values | Daily Returns |
Four Seasons Education vs. Graham Holdings Co
Performance |
| Timeline |
| Four Seasons Education |
| Graham Holdings |
Four Seasons and Graham Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Four Seasons and Graham Holdings
The main advantage of trading using opposite Four Seasons and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Seasons position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' long position.| Four Seasons vs. Wah Fu Education | Four Seasons vs. Sunlands Technology Group | Four Seasons vs. 51Talk Online Education | Four Seasons vs. China Liberal Education |
| Graham Holdings vs. Cable One | Graham Holdings vs. Adtalem Global Education | Graham Holdings vs. Axalta Coating Systems | Graham Holdings vs. Edgewell Personal Care |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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