Correlation Between TAL Education and Ambow Education
Can any of the company-specific risk be diversified away by investing in both TAL Education and Ambow Education 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 Ambow Education 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 Ambow Education Holding, you can compare the effects of market volatilities on TAL Education and Ambow Education 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 Ambow Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Ambow Education.
Diversification Opportunities for TAL Education and Ambow Education
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TAL and Ambow is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Ambow Education Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambow Education Holding 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 Ambow Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambow Education Holding has no effect on the direction of TAL Education i.e., TAL Education and Ambow Education go up and down completely randomly.
Pair Corralation between TAL Education and Ambow Education
Considering the 90-day investment horizon TAL Education is expected to generate 1.17 times less return on investment than Ambow Education. But when comparing it to its historical volatility, TAL Education Group is 1.64 times less risky than Ambow Education. It trades about 0.36 of its potential returns per unit of risk. Ambow Education Holding is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 181.00 in Ambow Education Holding on November 18, 2024 and sell it today you would earn a total of 91.00 from holding Ambow Education Holding or generate 50.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Ambow Education Holding
Performance |
| Timeline |
| TAL Education Group |
| Ambow Education Holding |
TAL Education and Ambow Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Ambow Education
The main advantage of trading using opposite TAL Education and Ambow Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Ambow Education 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 Ambow Education will offset losses from the drop in Ambow Education's long position.| TAL Education vs. Gaotu Techedu DRC | TAL Education vs. 17 Education Technology | TAL Education vs. Chegg Inc | TAL Education vs. Youdao Inc |
| Ambow Education vs. Vasta Platform | Ambow Education vs. Sunlands Technology Group | Ambow Education vs. Cogna Educacao SA | Ambow Education vs. American Public Education |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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