Correlation Between Stride and Sunlands Technology

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

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

Diversification Opportunities for Stride and Sunlands Technology

0.64

Correlation Coefficient

Stride  Sunlands Technology

Poor diversification

The 3 months correlation between Stride and Sunlands is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Stride Inc and Sunlands Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunlands Technology and Stride 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 Stride Inc 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 Stride i.e., Stride and Sunlands Technology go up and down completely randomly.

Pair Corralation between Stride and Sunlands Technology

Considering the 90-day investment horizon Stride Inc is expected to generate 0.42 times more return on investment than Sunlands Technology. However, Stride Inc is 2.37 times less risky than Sunlands Technology. It trades about 0.1 of its potential returns per unit of risk. Sunlands Technology Group is currently generating about 0.01 per unit of risk. If you would invest  11,113  in Stride Inc on January 9, 2025 and sell it today you would earn a total of  1,332  from holding Stride Inc or generate 11.99% return on investment over 90 days.

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

Stride Inc  vs.  Sunlands Technology Group

Stride Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stride Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Stride displayed solid returns over the last few months and may actually be approaching a breakup point.

Sunlands Technology

Risk-Adjusted Performance

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 Stride and Sunlands Technology

The main advantage of trading using opposite Stride and Sunlands Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stride 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 Stride Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.