Correlation Between TAL Education and Applied Materials
Can any of the company-specific risk be diversified away by investing in both TAL Education and Applied Materials 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 TAL Education and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAL Education Group and Applied Materials, you can compare the effects of market volatilities on TAL Education and Applied Materials 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 TAL Education with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Applied Materials.
Diversification Opportunities for TAL Education and Applied Materials
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TAL and Applied is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and TAL 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 TAL Education Group are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of TAL Education i.e., TAL Education and Applied Materials go up and down completely randomly.
Pair Corralation between TAL Education and Applied Materials
Assuming the 90 days trading horizon TAL Education Group is expected to generate 1.63 times more return on investment than Applied Materials. However, TAL Education is 1.63 times more volatile than Applied Materials. It trades about 0.12 of its potential returns per unit of risk. Applied Materials is currently generating about -0.01 per unit of risk. If you would invest 935.00 in TAL Education Group on October 30, 2024 and sell it today you would earn a total of 175.00 from holding TAL Education Group or generate 18.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Applied Materials
Performance |
| Timeline |
| TAL Education Group |
| Applied Materials |
TAL Education and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Applied Materials
The main advantage of trading using opposite TAL Education and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| TAL Education vs. DXC Technology Co | TAL Education vs. Thai Beverage Public | TAL Education vs. SENECA FOODS A | TAL Education vs. PATTIES FOODS |
| Applied Materials vs. ASML Holding NV | Applied Materials vs. KLA Corporation | Applied Materials vs. Teradyne | Applied Materials vs. ASM International NV |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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