Correlation Between TAL Education and EHEALTH
Can any of the company-specific risk be diversified away by investing in both TAL Education and EHEALTH 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 EHEALTH 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 EHEALTH, you can compare the effects of market volatilities on TAL Education and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and EHEALTH.
Diversification Opportunities for TAL Education and EHEALTH
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TAL and EHEALTH is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of TAL Education i.e., TAL Education and EHEALTH go up and down completely randomly.
Pair Corralation between TAL Education and EHEALTH
Assuming the 90 days trading horizon TAL Education Group is expected to under-perform the EHEALTH. But the stock apears to be less risky and, when comparing its historical volatility, TAL Education Group is 2.53 times less risky than EHEALTH. The stock trades about -0.05 of its potential returns per unit of risk. The EHEALTH is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 718.00 in EHEALTH on October 19, 2024 and sell it today you would earn a total of 213.00 from holding EHEALTH or generate 29.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. EHEALTH
Performance |
| Timeline |
| TAL Education Group |
| EHEALTH |
TAL Education and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and EHEALTH
The main advantage of trading using opposite TAL Education and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.| TAL Education vs. NORTHEAST UTILITIES | TAL Education vs. The Japan Steel | TAL Education vs. Xiwang Special Steel | TAL Education vs. Lamar Advertising |
| EHEALTH vs. Firan Technology Group | EHEALTH vs. Adtalem Global Education | EHEALTH vs. TAL Education Group | EHEALTH vs. Check Point Software |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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