Correlation Between Ambow Education and Apollo Education

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

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

Diversification Opportunities for Ambow Education and Apollo Education

0.0

Correlation Coefficient

Ambow Education  Apollo Education

Pay attention - limited upside

The 3 months correlation between Ambow and Apollo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding and Apollo Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Education and Ambow 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 Ambow Education Holding are associated (or correlated) with Apollo Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Education has no effect on the direction of Ambow Education i.e., Ambow Education and Apollo Education go up and down completely randomly.

Pair Corralation between Ambow Education and Apollo Education

If you would invest (100.00) in Apollo Education Group on January 24, 2024 and sell it today you would earn a total of  100.00  from holding Apollo Education Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ambow Education Holding  vs.  Apollo Education Group

Ambow Education Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ambow Education Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Ambow Education displayed solid returns over the last few months and may actually be approaching a breakup point.

Apollo Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Apollo Education is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ambow Education and Apollo Education

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

The idea behind Ambow Education Holding and Apollo Education Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.