Correlation Between GAEC Educacao and New Oriental
Can any of the company-specific risk be diversified away by investing in both GAEC Educacao and New Oriental 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 GAEC Educacao and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAEC Educacao SA and New Oriental Education, you can compare the effects of market volatilities on GAEC Educacao and New Oriental 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 GAEC Educacao with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAEC Educacao and New Oriental.
Diversification Opportunities for GAEC Educacao and New Oriental
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GAEC and New is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GAEC Educacao SA and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education and GAEC Educacao 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 GAEC Educacao SA are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of GAEC Educacao i.e., GAEC Educacao and New Oriental go up and down completely randomly.
Pair Corralation between GAEC Educacao and New Oriental
Assuming the 90 days trading horizon GAEC Educacao SA is expected to under-perform the New Oriental. In addition to that, GAEC Educacao is 2.0 times more volatile than New Oriental Education. It trades about -0.16 of its total potential returns per unit of risk. New Oriental Education is currently generating about -0.12 per unit of volatility. If you would invest 2,404 in New Oriental Education on August 31, 2024 and sell it today you would lose (171.00) from holding New Oriental Education or give up 7.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAEC Educacao SA vs. New Oriental Education
Performance |
| Timeline |
| GAEC Educacao SA |
| New Oriental Education |
GAEC Educacao and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAEC Educacao and New Oriental
The main advantage of trading using opposite GAEC Educacao and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAEC Educacao position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| GAEC Educacao vs. Engie Brasil Energia | GAEC Educacao vs. Fras le SA | GAEC Educacao vs. Energisa SA | GAEC Educacao vs. Clave Indices De |
| New Oriental vs. TAL Education Group | New Oriental vs. Fras le SA | New Oriental vs. Energisa SA | New Oriental vs. Clave Indices De |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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