Correlation Between TAL Education and Credit Acceptance
Can any of the company-specific risk be diversified away by investing in both TAL Education and Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance, you can compare the effects of market volatilities on TAL Education and Credit Acceptance 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 Credit Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Credit Acceptance.
Diversification Opportunities for TAL Education and Credit Acceptance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TAL and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Credit Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Acceptance 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 Credit Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Acceptance has no effect on the direction of TAL Education i.e., TAL Education and Credit Acceptance go up and down completely randomly.
Pair Corralation between TAL Education and Credit Acceptance
Assuming the 90 days trading horizon TAL Education Group is expected to generate 2.44 times more return on investment than Credit Acceptance. However, TAL Education is 2.44 times more volatile than Credit Acceptance. It trades about 0.05 of its potential returns per unit of risk. Credit Acceptance is currently generating about 0.03 per unit of risk. If you would invest 353.00 in TAL Education Group on August 30, 2024 and sell it today you would earn a total of 261.00 from holding TAL Education Group or generate 73.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
TAL Education Group vs. Credit Acceptance
Performance |
| Timeline |
| TAL Education Group |
| Credit Acceptance |
TAL Education and Credit Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Credit Acceptance
The main advantage of trading using opposite TAL Education and Credit Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Credit Acceptance 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 Credit Acceptance will offset losses from the drop in Credit Acceptance's long position.| TAL Education vs. Cogna Educao SA | TAL Education vs. Yduqs Participaes SA | TAL Education vs. GAEC Educacao SA | TAL Education vs. Ser Educacional Sa |
| Credit Acceptance vs. Extra Space Storage | Credit Acceptance vs. Warner Music Group | Credit Acceptance vs. GP Investments | Credit Acceptance vs. G2D Investments |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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