Correlation Between Technology Select and Ambow Education
Can any of the company-specific risk be diversified away by investing in both Technology Select and Ambow 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 Technology Select and Ambow Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and Ambow Education Holding, you can compare the effects of market volatilities on Technology Select and Ambow 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 Technology Select with a short position of Ambow Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and Ambow Education.
Diversification Opportunities for Technology Select and Ambow Education
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Technology and Ambow is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and Ambow Education Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambow Education Holding and Technology Select 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 Technology Select Sector are associated (or correlated) with Ambow Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambow Education Holding has no effect on the direction of Technology Select i.e., Technology Select and Ambow Education go up and down completely randomly.
Pair Corralation between Technology Select and Ambow Education
Considering the 90-day investment horizon Technology Select Sector is expected to generate 0.16 times more return on investment than Ambow Education. However, Technology Select Sector is 6.07 times less risky than Ambow Education. It trades about -0.31 of its potential returns per unit of risk. Ambow Education Holding is currently generating about -0.16 per unit of risk. If you would invest 20,852 in Technology Select Sector on January 24, 2024 and sell it today you would lose (1,427) from holding Technology Select Sector or give up 6.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Technology Select Sector vs. Ambow Education Holding
Performance |
| Timeline |
| Technology Select Sector |
| Ambow Education Holding |
Technology Select and Ambow Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and Ambow Education
The main advantage of trading using opposite Technology Select and Ambow Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, Ambow 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 Ambow Education will offset losses from the drop in Ambow Education's long position.| Technology Select vs. First Trust Exchange Traded | Technology Select vs. Horizon Kinetics Medical | Technology Select vs. Harbor Health Care | Technology Select vs. American Beacon GLG |
| Ambow Education vs. Vasta PlatformLtd | Ambow Education vs. Sunlands Technology Group | Ambow Education vs. Cogna Educacao SA | Ambow Education vs. American Public Education |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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