Correlation Between Take Two and New Oriental
Can any of the company-specific risk be diversified away by investing in both Take Two 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 Take Two and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and New Oriental Education, you can compare the effects of market volatilities on Take Two 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 Take Two with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and New Oriental.
Diversification Opportunities for Take Two and New Oriental
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Take and New is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software 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 Take Two 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 Take Two Interactive Software 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 Take Two i.e., Take Two and New Oriental go up and down completely randomly.
Pair Corralation between Take Two and New Oriental
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.56 times more return on investment than New Oriental. However, Take Two Interactive Software is 1.79 times less risky than New Oriental. It trades about 0.41 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.1 per unit of risk. If you would invest 20,916 in Take Two Interactive Software on August 30, 2024 and sell it today you would earn a total of 6,616 from holding Take Two Interactive Software or generate 31.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. New Oriental Education
Performance |
| Timeline |
| Take Two Interactive |
| New Oriental Education |
Take Two and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and New Oriental
The main advantage of trading using opposite Take Two and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two 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.| Take Two vs. Bread Financial Holdings | Take Two vs. The Trade Desk | Take Two vs. Tyson Foods | Take Two vs. Deutsche Bank Aktiengesellschaft |
| New Oriental vs. Prudential Financial | New Oriental vs. United Airlines Holdings | New Oriental vs. British American Tobacco | New Oriental vs. Southwest Airlines Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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