Correlation Between New Oriental and Ke Holdings
Can any of the company-specific risk be diversified away by investing in both New Oriental and Ke Holdings 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 Ke Holdings 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 Ke Holdings, you can compare the effects of market volatilities on New Oriental and Ke Holdings 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 Ke Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Ke Holdings.
Diversification Opportunities for New Oriental and Ke Holdings
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and BEKE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Ke Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ke Holdings 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 Ke Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ke Holdings has no effect on the direction of New Oriental i.e., New Oriental and Ke Holdings go up and down completely randomly.
Pair Corralation between New Oriental and Ke Holdings
Considering the 90-day investment horizon New Oriental Education is expected to generate 0.89 times more return on investment than Ke Holdings. However, New Oriental Education is 1.12 times less risky than Ke Holdings. It trades about 0.04 of its potential returns per unit of risk. Ke Holdings is currently generating about 0.03 per unit of risk. If you would invest 4,209 in New Oriental Education on August 31, 2024 and sell it today you would earn a total of 1,623 from holding New Oriental Education or generate 38.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. Ke Holdings
Performance |
| Timeline |
| New Oriental Education |
| Ke Holdings |
New Oriental and Ke Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Ke Holdings
The main advantage of trading using opposite New Oriental and Ke Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Ke Holdings 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 Ke Holdings will offset losses from the drop in Ke Holdings' 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 |
| Ke Holdings vs. Marcus Millichap | Ke Holdings vs. Digitalbridge Group | Ke Holdings vs. Jones Lang LaSalle | Ke Holdings vs. CBRE Group Class |
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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