Correlation Between New Oriental and Cogna Educao
Can any of the company-specific risk be diversified away by investing in both New Oriental and Cogna Educao 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 Cogna Educao 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 Cogna Educao SA, you can compare the effects of market volatilities on New Oriental and Cogna Educao 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 Cogna Educao. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Cogna Educao.
Diversification Opportunities for New Oriental and Cogna Educao
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Cogna is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Cogna Educao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogna Educao SA 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 Cogna Educao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogna Educao SA has no effect on the direction of New Oriental i.e., New Oriental and Cogna Educao go up and down completely randomly.
Pair Corralation between New Oriental and Cogna Educao
Assuming the 90 days trading horizon New Oriental Education is expected to generate 0.58 times more return on investment than Cogna Educao. However, New Oriental Education is 1.71 times less risky than Cogna Educao. It trades about -0.06 of its potential returns per unit of risk. Cogna Educao SA is currently generating about -0.06 per unit of risk. If you would invest 2,320 in New Oriental Education on August 24, 2024 and sell it today you would lose (88.00) from holding New Oriental Education or give up 3.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. Cogna Educao SA
Performance |
| Timeline |
| New Oriental Education |
| Cogna Educao SA |
New Oriental and Cogna Educao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Cogna Educao
The main advantage of trading using opposite New Oriental and Cogna Educao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Cogna Educao 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 Cogna Educao will offset losses from the drop in Cogna Educao's long position.| New Oriental vs. TAL Education Group | New Oriental vs. Fras le SA | New Oriental vs. Clave Indices De | New Oriental vs. BTG Pactual Logstica |
| Cogna Educao vs. New Oriental Education | Cogna Educao vs. TAL Education Group | Cogna Educao vs. Fras le SA | Cogna Educao 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |