Correlation Between Sunlands Technology and 51Talk Online

Can any of the company-specific risk be diversified away by investing in both Sunlands Technology and 51Talk Online 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 Sunlands Technology and 51Talk Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sunlands Technology Group and 51Talk Online Education, you can compare the effects of market volatilities on Sunlands Technology and 51Talk Online 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 Sunlands Technology with a short position of 51Talk Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunlands Technology and 51Talk Online.

Diversification Opportunities for Sunlands Technology and 51Talk Online

-0.22

Correlation Coefficient

Sunlands Technology  51Talk Online

Very good diversification

The 3 months correlation between Sunlands and 51Talk is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sunlands Technology Group and 51Talk Online Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 51Talk Online Education and Sunlands Technology 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 Sunlands Technology Group are associated (or correlated) with 51Talk Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 51Talk Online Education has no effect on the direction of Sunlands Technology i.e., Sunlands Technology and 51Talk Online go up and down completely randomly.

Pair Corralation between Sunlands Technology and 51Talk Online

Considering the 90-day investment horizon Sunlands Technology Group is expected to generate 1.64 times more return on investment than 51Talk Online. However, Sunlands Technology is 1.64 times more volatile than 51Talk Online Education. It trades about 0.05 of its potential returns per unit of risk. 51Talk Online Education is currently generating about 0.02 per unit of risk. If you would invest  434.00  in Sunlands Technology Group on February 3, 2024 and sell it today you would earn a total of  356.00  from holding Sunlands Technology Group or generate 82.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sunlands Technology Group  vs.  51Talk Online Education

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

51Talk Online Education

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, 51Talk Online may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Sunlands Technology and 51Talk Online

The main advantage of trading using opposite Sunlands Technology and 51Talk Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunlands Technology position performs unexpectedly, 51Talk Online 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 51Talk Online will offset losses from the drop in 51Talk Online's long position.

The idea behind Sunlands Technology Group and 51Talk Online 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.