Correlation Between Natural Health and TAL Education
Can any of the company-specific risk be diversified away by investing in both Natural Health and TAL Education 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 Natural Health and TAL Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trends and TAL Education Group, you can compare the effects of market volatilities on Natural Health and TAL Education 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 Natural Health with a short position of TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and TAL Education.
Diversification Opportunities for Natural Health and TAL Education
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Natural and TAL is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group and Natural Health 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 Natural Health Trends are associated (or correlated) with TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of Natural Health i.e., Natural Health and TAL Education go up and down completely randomly.
Pair Corralation between Natural Health and TAL Education
Assuming the 90 days trading horizon Natural Health Trends is expected to under-perform the TAL Education. But the stock apears to be less risky and, when comparing its historical volatility, Natural Health Trends is 1.86 times less risky than TAL Education. The stock trades about -0.02 of its potential returns per unit of risk. The TAL Education Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,030 in TAL Education Group on September 3, 2024 and sell it today you would lose (95.00) from holding TAL Education Group or give up 9.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. TAL Education Group
Performance |
| Timeline |
| Natural Health Trends |
| TAL Education Group |
Natural Health and TAL Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and TAL Education
The main advantage of trading using opposite Natural Health and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, TAL Education 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 TAL Education will offset losses from the drop in TAL Education's long position.| Natural Health vs. CITY OFFICE REIT | Natural Health vs. WillScot Mobile Mini | Natural Health vs. KIMBALL ELECTRONICS | Natural Health vs. ELECTRONIC ARTS |
| TAL Education vs. Caltagirone SpA | TAL Education vs. Compagnie Plastic Omnium | TAL Education vs. Steel Dynamics | TAL Education vs. Goodyear Tire Rubber |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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