Correlation Between Elite Education and New Oriental
Can any of the company-specific risk be diversified away by investing in both Elite Education and New Oriental 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 Elite Education and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Education Group and New Oriental Education, you can compare the effects of market volatilities on Elite Education and New Oriental 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 Elite Education with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Education and New Oriental.
Diversification Opportunities for Elite Education and New Oriental
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Elite and New is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education and Elite Education 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 Elite Education Group are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Elite Education i.e., Elite Education and New Oriental go up and down completely randomly.
Pair Corralation between Elite Education and New Oriental
Given the investment horizon of 90 days Elite Education Group is expected to generate 0.46 times more return on investment than New Oriental. However, Elite Education Group is 2.15 times less risky than New Oriental. It trades about -0.01 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.21 per unit of risk. If you would invest 100.00 in Elite Education Group on November 2, 2024 and sell it today you would lose (1.00) from holding Elite Education Group or give up 1.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Education Group vs. New Oriental Education
Performance |
| Timeline |
| Elite Education Group |
| New Oriental Education |
Elite Education and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Education and New Oriental
The main advantage of trading using opposite Elite Education and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Education position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| Elite Education vs. Golden Sun Education | Elite Education vs. Jianzhi Education Technology | Elite Education vs. Genius Group | Elite Education vs. Lixiang Education Holding |
| New Oriental vs. Gaotu Techedu DRC | New Oriental vs. 17 Education Technology | New Oriental vs. Chegg Inc | New Oriental vs. Elite Education Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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