Correlation Between Research Alliance and Sunlands Technology

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

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

Diversification Opportunities for Research Alliance and Sunlands Technology

0.27

Correlation Coefficient

Research Alliance  Sunlands Technology

Modest diversification

The 3 months correlation between Research and Sunlands is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Research Alliance Corp and Sunlands Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunlands Technology and Research Alliance 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 Research Alliance Corp are associated (or correlated) with Sunlands Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunlands Technology has no effect on the direction of Research Alliance i.e., Research Alliance and Sunlands Technology go up and down completely randomly.

Pair Corralation between Research Alliance and Sunlands Technology

If you would invest (100.00) in Research Alliance Corp on February 5, 2024 and sell it today you would earn a total of  100.00  from holding Research Alliance Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Research Alliance Corp  vs.  Sunlands Technology Group

Research Alliance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Research Alliance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Research Alliance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 nearly stable basic indicators, Sunlands Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Research Alliance and Sunlands Technology

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

The idea behind Research Alliance Corp and Sunlands Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.