Correlation Between TAL Education and Hisense Home
Can any of the company-specific risk be diversified away by investing in both TAL Education and Hisense Home 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 Hisense Home 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 Hisense Home Appliances, you can compare the effects of market volatilities on TAL Education and Hisense Home 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 Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Hisense Home.
Diversification Opportunities for TAL Education and Hisense Home
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TAL and Hisense is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Hisense Home Appliances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisense Home Appliances 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 Hisense Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisense Home Appliances has no effect on the direction of TAL Education i.e., TAL Education and Hisense Home go up and down completely randomly.
Pair Corralation between TAL Education and Hisense Home
Assuming the 90 days trading horizon TAL Education Group is expected to generate 1.23 times more return on investment than Hisense Home. However, TAL Education is 1.23 times more volatile than Hisense Home Appliances. It trades about -0.02 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about -0.17 per unit of risk. If you would invest 990.00 in TAL Education Group on August 30, 2024 and sell it today you would lose (25.00) from holding TAL Education Group or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Hisense Home Appliances
Performance |
| Timeline |
| TAL Education Group |
| Hisense Home Appliances |
TAL Education and Hisense Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Hisense Home
The main advantage of trading using opposite TAL Education and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Hisense Home 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 Hisense Home will offset losses from the drop in Hisense Home's long position.| TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education vs. Apple Inc |
| Hisense Home vs. Westinghouse Air Brake | Hisense Home vs. Charter Communications | Hisense Home vs. Mobilezone Holding AG | Hisense Home vs. NORWEGIAN AIR SHUT |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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