Correlation Between New Oriental and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both New Oriental and Companhia Siderrgica 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 Companhia Siderrgica 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 Companhia Siderrgica Nacional, you can compare the effects of market volatilities on New Oriental and Companhia Siderrgica 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 Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Companhia Siderrgica.
Diversification Opportunities for New Oriental and Companhia Siderrgica
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and Companhia is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica 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 Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of New Oriental i.e., New Oriental and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between New Oriental and Companhia Siderrgica
Assuming the 90 days trading horizon New Oriental Education is expected to generate 1.26 times more return on investment than Companhia Siderrgica. However, New Oriental is 1.26 times more volatile than Companhia Siderrgica Nacional. It trades about 0.01 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.05 per unit of risk. If you would invest 131,815 in New Oriental Education on September 14, 2024 and sell it today you would lose (5,215) from holding New Oriental Education or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| New Oriental Education |
| Companhia Siderrgica |
New Oriental and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Companhia Siderrgica
The main advantage of trading using opposite New Oriental and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Companhia Siderrgica 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 Companhia Siderrgica will offset losses from the drop in Companhia Siderrgica's long position.| New Oriental vs. Cognizant Technology Solutions | New Oriental vs. United States Steel | New Oriental vs. Delta Air Lines | New Oriental vs. Grupo Sports World |
| Companhia Siderrgica vs. Steel Dynamics | Companhia Siderrgica vs. United States Steel | Companhia Siderrgica vs. The Select Sector | Companhia Siderrgica vs. Promotora y Operadora |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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