Correlation Between LAIX and Skillful Craftsman

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

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

Diversification Opportunities for LAIX and Skillful Craftsman

0.0

Correlation Coefficient

LAIX  Skillful Craftsman

Pay attention - limited upside

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

Pair Corralation between LAIX and Skillful Craftsman

If you would invest (100.00) in LAIX Inc on January 21, 2024 and sell it today you would earn a total of  100.00  from holding LAIX Inc 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

LAIX Inc  vs.  Skillful Craftsman Education

LAIX Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAIX Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, LAIX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Skillful Craftsman

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Skillful Craftsman Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Skillful Craftsman is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with LAIX and Skillful Craftsman

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

The idea behind LAIX Inc and Skillful Craftsman Education 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 Transaction History module to view history of all your transactions and understand their impact on performance.