Correlation Between BRP and Tarena International
Can any of the company-specific risk be diversified away by investing in both BRP and Tarena International 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 BRP and Tarena International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Tarena International, you can compare the effects of market volatilities on BRP and Tarena International 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 BRP with a short position of Tarena International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Tarena International.
Diversification Opportunities for BRP and Tarena International
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BRP and Tarena is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Tarena International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarena International and BRP 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 BRP Inc are associated (or correlated) with Tarena International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarena International has no effect on the direction of BRP i.e., BRP and Tarena International go up and down completely randomly.
Pair Corralation between BRP and Tarena International
Given the investment horizon of 90 days BRP Inc is expected to under-perform the Tarena International. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 3.72 times less risky than Tarena International. The stock trades about -0.03 of its potential returns per unit of risk. The Tarena International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Tarena International on September 2, 2024 and sell it today you would lose (16.00) from holding Tarena International or give up 16.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRP Inc vs. Tarena International
Performance |
| Timeline |
| BRP Inc |
| Tarena International |
BRP and Tarena International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and Tarena International
The main advantage of trading using opposite BRP and Tarena International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, Tarena International 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 Tarena International will offset losses from the drop in Tarena International's long position.The idea behind BRP Inc and Tarena International 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.| Tarena International vs. Catalent | Tarena International vs. Marine Products | Tarena International vs. BRP Inc | Tarena International vs. Brunswick |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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