Correlation Between Highlight Communications and TAL Education
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and TAL Education 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 Highlight Communications and TAL Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highlight Communications AG and TAL Education Group, you can compare the effects of market volatilities on Highlight Communications and TAL Education 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 Highlight Communications with a short position of TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and TAL Education.
Diversification Opportunities for Highlight Communications and TAL Education
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Highlight and TAL is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group and Highlight Communications 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 Highlight Communications AG are associated (or correlated) with TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of Highlight Communications i.e., Highlight Communications and TAL Education go up and down completely randomly.
Pair Corralation between Highlight Communications and TAL Education
Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the TAL Education. But the stock apears to be less risky and, when comparing its historical volatility, Highlight Communications AG is 1.9 times less risky than TAL Education. The stock trades about -0.08 of its potential returns per unit of risk. The TAL Education Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 556.00 in TAL Education Group on September 3, 2024 and sell it today you would earn a total of 379.00 from holding TAL Education Group or generate 68.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. TAL Education Group
Performance |
| Timeline |
| Highlight Communications |
| TAL Education Group |
Highlight Communications and TAL Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and TAL Education
The main advantage of trading using opposite Highlight Communications and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, TAL Education 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 TAL Education will offset losses from the drop in TAL Education's long position.| Highlight Communications vs. The Walt Disney | Highlight Communications vs. Netflix | Highlight Communications vs. CTS Eventim AG |
| TAL Education vs. Caltagirone SpA | TAL Education vs. Compagnie Plastic Omnium | TAL Education vs. Steel Dynamics | TAL Education vs. Goodyear Tire Rubber |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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