Correlation Between TAL Education and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both TAL Education and Meiko Electronics 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 Meiko Electronics 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 Meiko Electronics Co, you can compare the effects of market volatilities on TAL Education and Meiko Electronics 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 Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Meiko Electronics.
Diversification Opportunities for TAL Education and Meiko Electronics
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between TAL and Meiko is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics 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 Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of TAL Education i.e., TAL Education and Meiko Electronics go up and down completely randomly.
Pair Corralation between TAL Education and Meiko Electronics
Assuming the 90 days trading horizon TAL Education Group is expected to under-perform the Meiko Electronics. But the stock apears to be less risky and, when comparing its historical volatility, TAL Education Group is 1.52 times less risky than Meiko Electronics. The stock trades about -0.02 of its potential returns per unit of risk. The Meiko Electronics Co is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 3,640 in Meiko Electronics Co on August 30, 2024 and sell it today you would earn a total of 1,810 from holding Meiko Electronics Co or generate 49.73% 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. Meiko Electronics Co
Performance |
| Timeline |
| TAL Education Group |
| Meiko Electronics |
TAL Education and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Meiko Electronics
The main advantage of trading using opposite TAL Education and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Meiko Electronics 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.| TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education vs. Apple Inc |
| Meiko Electronics vs. Superior Plus Corp | Meiko Electronics vs. NMI Holdings | Meiko Electronics vs. SIVERS SEMICONDUCTORS AB | Meiko Electronics vs. Talanx AG |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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