Correlation Between Sable Offshore and New Oriental
Can any of the company-specific risk be diversified away by investing in both Sable Offshore and New Oriental 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 Sable Offshore and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sable Offshore Corp and New Oriental Education, you can compare the effects of market volatilities on Sable Offshore and New Oriental 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 Sable Offshore with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and New Oriental.
Diversification Opportunities for Sable Offshore and New Oriental
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sable and New is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education and Sable Offshore 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 Sable Offshore Corp are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Sable Offshore i.e., Sable Offshore and New Oriental go up and down completely randomly.
Pair Corralation between Sable Offshore and New Oriental
Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.42 times more return on investment than New Oriental. However, Sable Offshore is 1.42 times more volatile than New Oriental Education. It trades about 0.11 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.06 per unit of risk. If you would invest 1,067 in Sable Offshore Corp on November 3, 2024 and sell it today you would earn a total of 1,426 from holding Sable Offshore Corp or generate 133.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sable Offshore Corp vs. New Oriental Education
Performance |
| Timeline |
| Sable Offshore Corp |
| New Oriental Education |
Sable Offshore and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sable Offshore and New Oriental
The main advantage of trading using opposite Sable Offshore and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| Sable Offshore vs. Custom Truck One | Sable Offshore vs. United Rentals | Sable Offshore vs. Emerson Radio | Sable Offshore vs. Alta Equipment Group |
| New Oriental vs. Gaotu Techedu DRC | New Oriental vs. 17 Education Technology | New Oriental vs. Chegg Inc | New Oriental vs. Elite Education Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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