Correlation Between TAL Education and G2D Investments
Can any of the company-specific risk be diversified away by investing in both TAL Education and G2D Investments 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 G2D Investments 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 G2D Investments, you can compare the effects of market volatilities on TAL Education and G2D Investments 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 G2D Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and G2D Investments.
Diversification Opportunities for TAL Education and G2D Investments
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TAL and G2D is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and G2D Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G2D Investments 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 G2D Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G2D Investments has no effect on the direction of TAL Education i.e., TAL Education and G2D Investments go up and down completely randomly.
Pair Corralation between TAL Education and G2D Investments
Assuming the 90 days trading horizon TAL Education Group is expected to generate 1.36 times more return on investment than G2D Investments. However, TAL Education is 1.36 times more volatile than G2D Investments. It trades about -0.02 of its potential returns per unit of risk. G2D Investments is currently generating about -0.13 per unit of risk. If you would invest 636.00 in TAL Education Group on August 31, 2024 and sell it today you would lose (14.00) from holding TAL Education Group or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. G2D Investments
Performance |
| Timeline |
| TAL Education Group |
| G2D Investments |
TAL Education and G2D Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and G2D Investments
The main advantage of trading using opposite TAL Education and G2D Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, G2D Investments 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 G2D Investments will offset losses from the drop in G2D Investments' long position.| TAL Education vs. New Oriental Education | TAL Education vs. Fras le SA | TAL Education vs. Energisa SA | TAL Education vs. Clave Indices De |
| G2D Investments vs. The Bank of | G2D Investments vs. Ameriprise Financial | G2D Investments vs. Banco BTG Pactual | G2D Investments vs. Banco BTG Pactual |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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