Correlation Between TAL Education and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both TAL Education and Eagle 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 Eagle 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 Eagle Materials, you can compare the effects of market volatilities on TAL Education and Eagle 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 Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Eagle Materials.
Diversification Opportunities for TAL Education and Eagle Materials
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TAL and Eagle is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of TAL Education i.e., TAL Education and Eagle Materials go up and down completely randomly.
Pair Corralation between TAL Education and Eagle Materials
Assuming the 90 days trading horizon TAL Education Group is expected to under-perform the Eagle Materials. In addition to that, TAL Education is 1.65 times more volatile than Eagle Materials. It trades about -0.1 of its total potential returns per unit of risk. Eagle Materials is currently generating about 0.26 per unit of volatility. If you would invest 26,600 in Eagle Materials on August 29, 2024 and sell it today you would earn a total of 3,200 from holding Eagle Materials or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Eagle Materials
Performance |
| Timeline |
| TAL Education Group |
| Eagle Materials |
TAL Education and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Eagle Materials
The main advantage of trading using opposite TAL Education and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Eagle 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education vs. Apple Inc |
| Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings | Eagle Materials vs. Origin Agritech | Eagle Materials vs. SIVERS SEMICONDUCTORS AB |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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