Correlation Between GUOMAI Culture and Pearson PLC

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Can any of the company-specific risk be diversified away by investing in both GUOMAI Culture and Pearson PLC 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 GUOMAI Culture and Pearson PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUOMAI Culture Media and Pearson PLC ADR, you can compare the effects of market volatilities on GUOMAI Culture and Pearson PLC 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 GUOMAI Culture with a short position of Pearson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUOMAI Culture and Pearson PLC.

Diversification Opportunities for GUOMAI Culture and Pearson PLC

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between GUOMAI and Pearson is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding GUOMAI Culture Media and Pearson PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearson PLC ADR and GUOMAI Culture 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 GUOMAI Culture Media are associated (or correlated) with Pearson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearson PLC ADR has no effect on the direction of GUOMAI Culture i.e., GUOMAI Culture and Pearson PLC go up and down completely randomly.

Pair Corralation between GUOMAI Culture and Pearson PLC

Assuming the 90 days trading horizon GUOMAI Culture Media is expected to under-perform the Pearson PLC. In addition to that, GUOMAI Culture is 4.77 times more volatile than Pearson PLC ADR. It trades about -0.09 of its total potential returns per unit of risk. Pearson PLC ADR is currently generating about -0.11 per unit of volatility. If you would invest  1,453  in Pearson PLC ADR on August 18, 2025 and sell it today you would lose (133.00) from holding Pearson PLC ADR or give up 9.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy92.31%
ValuesDaily Returns

GUOMAI Culture Media  vs.  Pearson PLC ADR

 Performance 
       Timeline  
GUOMAI Culture Media 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days GUOMAI Culture Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Pearson PLC ADR 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Pearson PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

GUOMAI Culture and Pearson PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GUOMAI Culture and Pearson PLC

The main advantage of trading using opposite GUOMAI Culture and Pearson PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUOMAI Culture position performs unexpectedly, Pearson PLC 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 Pearson PLC will offset losses from the drop in Pearson PLC's long position.
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The idea behind GUOMAI Culture Media and Pearson PLC ADR 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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