Correlation Between New Oriental and Ser Educacional
Can any of the company-specific risk be diversified away by investing in both New Oriental and Ser Educacional 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 Ser Educacional 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 Ser Educacional Sa, you can compare the effects of market volatilities on New Oriental and Ser Educacional 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 Ser Educacional. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Ser Educacional.
Diversification Opportunities for New Oriental and Ser Educacional
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Ser is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Ser Educacional Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ser Educacional 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 Ser Educacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ser Educacional Sa has no effect on the direction of New Oriental i.e., New Oriental and Ser Educacional go up and down completely randomly.
Pair Corralation between New Oriental and Ser Educacional
Assuming the 90 days trading horizon New Oriental Education is expected to generate 0.54 times more return on investment than Ser Educacional. However, New Oriental Education is 1.84 times less risky than Ser Educacional. It trades about -0.12 of its potential returns per unit of risk. Ser Educacional Sa is currently generating about -0.07 per unit of risk. 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 |
New Oriental Education vs. Ser Educacional Sa
Performance |
| Timeline |
| New Oriental Education |
| Ser Educacional Sa |
New Oriental and Ser Educacional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Ser Educacional
The main advantage of trading using opposite New Oriental and Ser Educacional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Ser Educacional 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 Ser Educacional will offset losses from the drop in Ser Educacional's long position.| New Oriental vs. TAL Education Group | New Oriental vs. Fras le SA | New Oriental vs. Energisa SA | New Oriental vs. Clave Indices De |
| Ser Educacional vs. Engie Brasil Energia | Ser Educacional vs. Fras le SA | Ser Educacional vs. Energisa SA | Ser Educacional 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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