Correlation Between Gaotu Techedu and Tarena Intl
Can any of the company-specific risk be diversified away by investing in both Gaotu Techedu and Tarena Intl 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 Gaotu Techedu and Tarena Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaotu Techedu DRC and Tarena Intl Adr, you can compare the effects of market volatilities on Gaotu Techedu and Tarena Intl 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 Gaotu Techedu with a short position of Tarena Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaotu Techedu and Tarena Intl.
Diversification Opportunities for Gaotu Techedu and Tarena Intl
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gaotu and Tarena is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gaotu Techedu DRC and Tarena Intl Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarena Intl Adr and Gaotu Techedu 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 Gaotu Techedu DRC are associated (or correlated) with Tarena Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarena Intl Adr has no effect on the direction of Gaotu Techedu i.e., Gaotu Techedu and Tarena Intl go up and down completely randomly.
Pair Corralation between Gaotu Techedu and Tarena Intl
Given the investment horizon of 90 days Gaotu Techedu DRC is expected to generate 1.22 times more return on investment than Tarena Intl. However, Gaotu Techedu is 1.22 times more volatile than Tarena Intl Adr. It trades about 0.02 of its potential returns per unit of risk. Tarena Intl Adr is currently generating about -0.09 per unit of risk. If you would invest 329.00 in Gaotu Techedu DRC on August 31, 2024 and sell it today you would lose (42.00) from holding Gaotu Techedu DRC or give up 12.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 28.51% |
| Values | Daily Returns |
Gaotu Techedu DRC vs. Tarena Intl Adr
Performance |
| Timeline |
| Gaotu Techedu DRC |
| Tarena Intl Adr |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Gaotu Techedu and Tarena Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaotu Techedu and Tarena Intl
The main advantage of trading using opposite Gaotu Techedu and Tarena Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaotu Techedu position performs unexpectedly, Tarena Intl 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 Tarena Intl will offset losses from the drop in Tarena Intl's long position.| Gaotu Techedu vs. TAL Education Group | Gaotu Techedu vs. 17 Education Technology | Gaotu Techedu vs. New Oriental Education | Gaotu Techedu vs. RLX Technology |
| Tarena Intl vs. Bright Scholar Education | Tarena Intl vs. Laureate Education | Tarena Intl vs. China Liberal Education | Tarena Intl vs. Quality Online 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 Stocks Directory module to find actively traded stocks across global markets.
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