Correlation Between Laureate Education and Gravitas Education

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

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

Diversification Opportunities for Laureate Education and Gravitas Education

-0.36

Correlation Coefficient

Laureate Education  Gravitas Education

Very good diversification

The 3 months correlation between Laureate and Gravitas is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and Gravitas Education Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gravitas Education and Laureate 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 Laureate Education are associated (or correlated) with Gravitas Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gravitas Education has no effect on the direction of Laureate Education i.e., Laureate Education and Gravitas Education go up and down completely randomly.

Pair Corralation between Laureate Education and Gravitas Education

If you would invest  1,309  in Gravitas Education Holdings on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Gravitas Education Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Laureate Education  vs.  Gravitas Education Holdings

Laureate Education

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laureate Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Laureate Education may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gravitas Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gravitas Education Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Gravitas Education is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Laureate Education and Gravitas Education

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

The idea behind Laureate Education and Gravitas Education Holdings 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.