Correlation Between TAL Education and HK Electric
Can any of the company-specific risk be diversified away by investing in both TAL Education and HK Electric 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 HK Electric 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 HK Electric Investments, you can compare the effects of market volatilities on TAL Education and HK Electric 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 HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and HK Electric.
Diversification Opportunities for TAL Education and HK Electric
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between TAL and HKT is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments 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 HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of TAL Education i.e., TAL Education and HK Electric go up and down completely randomly.
Pair Corralation between TAL Education and HK Electric
Assuming the 90 days trading horizon TAL Education Group is expected to under-perform the HK Electric. In addition to that, TAL Education is 3.99 times more volatile than HK Electric Investments. It trades about -0.02 of its total potential returns per unit of risk. HK Electric Investments is currently generating about 0.05 per unit of volatility. If you would invest 62.00 in HK Electric Investments on September 19, 2024 and sell it today you would earn a total of 1.00 from holding HK Electric Investments or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. HK Electric Investments
Performance |
| Timeline |
| TAL Education Group |
| HK Electric Investments |
TAL Education and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and HK Electric
The main advantage of trading using opposite TAL Education and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.| TAL Education vs. REVO INSURANCE SPA | TAL Education vs. QBE Insurance Group | TAL Education vs. Elmos Semiconductor SE | TAL Education vs. Goosehead Insurance |
| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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