Correlation Between TAL Education and Cogna Educao
Can any of the company-specific risk be diversified away by investing in both TAL Education and Cogna Educao 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 Cogna Educao 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 Cogna Educao SA, you can compare the effects of market volatilities on TAL Education and Cogna Educao 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 Cogna Educao. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Cogna Educao.
Diversification Opportunities for TAL Education and Cogna Educao
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between TAL and Cogna is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Cogna Educao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogna Educao SA 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 Cogna Educao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogna Educao SA has no effect on the direction of TAL Education i.e., TAL Education and Cogna Educao go up and down completely randomly.
Pair Corralation between TAL Education and Cogna Educao
Assuming the 90 days trading horizon TAL Education Group is expected to generate 0.64 times more return on investment than Cogna Educao. However, TAL Education Group is 1.57 times less risky than Cogna Educao. It trades about -0.04 of its potential returns per unit of risk. Cogna Educao SA is currently generating about -0.06 per unit of risk. If you would invest 586.00 in TAL Education Group on August 24, 2024 and sell it today you would lose (18.00) from holding TAL Education Group or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Cogna Educao SA
Performance |
| Timeline |
| TAL Education Group |
| Cogna Educao SA |
TAL Education and Cogna Educao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Cogna Educao
The main advantage of trading using opposite TAL Education and Cogna Educao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Cogna Educao 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 Cogna Educao will offset losses from the drop in Cogna Educao's long position.| TAL Education vs. New Oriental Education | TAL Education vs. Fras le SA | TAL Education vs. Clave Indices De | TAL Education vs. BTG Pactual Logstica |
| Cogna Educao vs. New Oriental Education | Cogna Educao vs. TAL Education Group | Cogna Educao vs. Fras le SA | Cogna Educao vs. Clave Indices De |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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