Correlation Between CITY OFFICE and TAL Education
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and TAL 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 CITY OFFICE and TAL Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITY OFFICE REIT and TAL Education Group, you can compare the effects of market volatilities on CITY OFFICE and TAL 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 CITY OFFICE with a short position of TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and TAL Education.
Diversification Opportunities for CITY OFFICE and TAL Education
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between CITY and TAL is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group and CITY OFFICE 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 CITY OFFICE REIT are associated (or correlated) with TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and TAL Education go up and down completely randomly.
Pair Corralation between CITY OFFICE and TAL Education
Assuming the 90 days horizon CITY OFFICE is expected to generate 19.41 times less return on investment than TAL Education. But when comparing it to its historical volatility, CITY OFFICE REIT is 1.36 times less risky than TAL Education. It trades about 0.0 of its potential returns per unit of risk. TAL Education Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 662.00 in TAL Education Group on September 24, 2024 and sell it today you would earn a total of 263.00 from holding TAL Education Group or generate 39.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. TAL Education Group
Performance |
| Timeline |
| CITY OFFICE REIT |
| TAL Education Group |
CITY OFFICE and TAL Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and TAL Education
The main advantage of trading using opposite CITY OFFICE and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, TAL 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 TAL Education will offset losses from the drop in TAL Education's long position.| CITY OFFICE vs. ECHO INVESTMENT ZY | CITY OFFICE vs. PUBLIC STORAGE PRFO | CITY OFFICE vs. DATANG INTL POW | CITY OFFICE vs. Hyrican Informationssysteme Aktiengesellschaft |
| TAL Education vs. Gaztransport Technigaz SA | TAL Education vs. Texas Roadhouse | TAL Education vs. TITANIUM TRANSPORTGROUP | TAL Education vs. CITY OFFICE REIT |
Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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