Correlation Between SIMS METAL and TAL Education
Can any of the company-specific risk be diversified away by investing in both SIMS METAL 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 SIMS METAL and TAL Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMS METAL MGT and TAL Education Group, you can compare the effects of market volatilities on SIMS METAL 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 SIMS METAL with a short position of TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and TAL Education.
Diversification Opportunities for SIMS METAL and TAL Education
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SIMS and TAL is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT 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 SIMS METAL 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 SIMS METAL MGT 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 SIMS METAL i.e., SIMS METAL and TAL Education go up and down completely randomly.
Pair Corralation between SIMS METAL and TAL Education
Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 0.8 times more return on investment than TAL Education. However, SIMS METAL MGT is 1.26 times less risky than TAL Education. It trades about 0.11 of its potential returns per unit of risk. TAL Education Group is currently generating about -0.04 per unit of risk. If you would invest 765.00 in SIMS METAL MGT on September 1, 2024 and sell it today you would earn a total of 45.00 from holding SIMS METAL MGT or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. TAL Education Group
Performance |
| Timeline |
| SIMS METAL MGT |
| TAL Education Group |
SIMS METAL and TAL Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and TAL Education
The main advantage of trading using opposite SIMS METAL and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL 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.| SIMS METAL vs. Martin Marietta Materials | SIMS METAL vs. Hyster Yale Materials Handling | SIMS METAL vs. Plastic Omnium | SIMS METAL vs. MGIC INVESTMENT |
| TAL Education vs. MIRAMAR HOTEL INV | TAL Education vs. HYATT HOTELS A | TAL Education vs. Summit Hotel Properties | TAL Education vs. CHINA 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |