Correlation Between Elite Education and CSPC Pharmaceutical

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

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

Diversification Opportunities for Elite Education and CSPC Pharmaceutical

-0.55

Correlation Coefficient

Elite Education  CSPC Pharmaceutical

Excellent diversification

The 3 months correlation between Elite and CSPC is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and CSPC Pharmaceutical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSPC Pharmaceutical and Elite 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 Elite Education Group are associated (or correlated) with CSPC Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSPC Pharmaceutical has no effect on the direction of Elite Education i.e., Elite Education and CSPC Pharmaceutical go up and down completely randomly.

Pair Corralation between Elite Education and CSPC Pharmaceutical

Given the investment horizon of 90 days Elite Education Group is expected to generate 6.96 times more return on investment than CSPC Pharmaceutical. However, Elite Education is 6.96 times more volatile than CSPC Pharmaceutical Group. It trades about 0.04 of its potential returns per unit of risk. CSPC Pharmaceutical Group is currently generating about 0.22 per unit of risk. If you would invest  60.00  in Elite Education Group on July 28, 2025 and sell it today you would lose (14.00) from holding Elite Education Group or give up 23.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	55.38%
Values	Daily Returns

Elite Education Group  vs.  CSPC Pharmaceutical Group

Elite Education Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Education Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward indicators, Elite Education reported solid returns over the last few months and may actually be approaching a breakup point.

CSPC Pharmaceutical

Risk-Adjusted Performance

Solid

Over the last 90 days CSPC Pharmaceutical Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, CSPC Pharmaceutical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elite Education and CSPC Pharmaceutical

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

The idea behind Elite Education Group and CSPC Pharmaceutical 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 Global Correlations module to find global opportunities by holding instruments from different markets.