Correlation Between TAL Education and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both TAL Education and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on TAL Education and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Chesapeake Utilities.
Diversification Opportunities for TAL Education and Chesapeake Utilities
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between TAL and Chesapeake is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of TAL Education i.e., TAL Education and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between TAL Education and Chesapeake Utilities
Assuming the 90 days trading horizon TAL Education Group is expected to generate 3.2 times more return on investment than Chesapeake Utilities. However, TAL Education is 3.2 times more volatile than Chesapeake Utilities. It trades about 0.04 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.08 per unit of risk. If you would invest 1,020 in TAL Education Group on December 12, 2024 and sell it today you would earn a total of 220.00 from holding TAL Education Group or generate 21.57% 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. Chesapeake Utilities
Performance |
| Timeline |
| TAL Education Group |
| Chesapeake Utilities |
TAL Education and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Chesapeake Utilities
The main advantage of trading using opposite TAL Education and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| TAL Education vs. GLG LIFE TECH | ||
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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