Correlation Between New Oriental and Apartment Investment
Can any of the company-specific risk be diversified away by investing in both New Oriental and Apartment Investment 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 New Oriental and Apartment Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Apartment Investment and, you can compare the effects of market volatilities on New Oriental and Apartment Investment 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 New Oriental with a short position of Apartment Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Apartment Investment.
Diversification Opportunities for New Oriental and Apartment Investment
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Apartment is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and and New Oriental 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 New Oriental Education are associated (or correlated) with Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of New Oriental i.e., New Oriental and Apartment Investment go up and down completely randomly.
Pair Corralation between New Oriental and Apartment Investment
Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Apartment Investment. In addition to that, New Oriental is 1.3 times more volatile than Apartment Investment and. It trades about -0.13 of its total potential returns per unit of risk. Apartment Investment and is currently generating about 0.02 per unit of volatility. If you would invest 4,985 in Apartment Investment and on August 28, 2024 and sell it today you would earn a total of 15.00 from holding Apartment Investment and or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. Apartment Investment and
Performance |
| Timeline |
| New Oriental Education |
| Apartment Investment and |
New Oriental and Apartment Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Apartment Investment
The main advantage of trading using opposite New Oriental and Apartment Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Apartment Investment 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 Apartment Investment will offset losses from the drop in Apartment Investment's long position.| New Oriental vs. Fras le SA | New Oriental vs. Clave Indices De | New Oriental vs. BTG Pactual Logstica | New Oriental vs. Telefonaktiebolaget LM Ericsson |
| Apartment Investment vs. Fras le SA | Apartment Investment vs. Clave Indices De | Apartment Investment vs. BTG Pactual Logstica | Apartment Investment vs. Telefonaktiebolaget LM Ericsson |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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