Correlation Between New Oriental and Adtalem Global
Can any of the company-specific risk be diversified away by investing in both New Oriental and Adtalem Global 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 Adtalem Global 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 Adtalem Global Education, you can compare the effects of market volatilities on New Oriental and Adtalem Global 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 Adtalem Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Adtalem Global.
Diversification Opportunities for New Oriental and Adtalem Global
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Adtalem is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education 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 Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of New Oriental i.e., New Oriental and Adtalem Global go up and down completely randomly.
Pair Corralation between New Oriental and Adtalem Global
Considering the 90-day investment horizon New Oriental Education is expected to under-perform the Adtalem Global. But the stock apears to be less risky and, when comparing its historical volatility, New Oriental Education is 1.46 times less risky than Adtalem Global. The stock trades about -0.13 of its potential returns per unit of risk. The Adtalem Global Education is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 8,212 in Adtalem Global Education on August 31, 2024 and sell it today you would earn a total of 863.00 from holding Adtalem Global Education or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. Adtalem Global Education
Performance |
| Timeline |
| New Oriental Education |
| Adtalem Global Education |
New Oriental and Adtalem Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Adtalem Global
The main advantage of trading using opposite New Oriental and Adtalem Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Adtalem Global 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 Adtalem Global will offset losses from the drop in Adtalem Global's long position.| New Oriental vs. Gaotu Techedu DRC | New Oriental vs. 17 Education Technology | New Oriental vs. Chegg Inc | New Oriental vs. Elite Education Group |
| Adtalem Global vs. Grand Canyon Education | Adtalem Global vs. Afya | Adtalem Global vs. Bright Scholar Education | Adtalem Global vs. Laureate Education |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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