Correlation Between Vale SA and New Oriental
Can any of the company-specific risk be diversified away by investing in both Vale SA 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 Vale SA and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and New Oriental Education, you can compare the effects of market volatilities on Vale SA 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 Vale SA with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and New Oriental.
Diversification Opportunities for Vale SA and New Oriental
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vale and New is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA 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 Vale SA 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 Vale SA 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 Vale SA i.e., Vale SA and New Oriental go up and down completely randomly.
Pair Corralation between Vale SA and New Oriental
Assuming the 90 days trading horizon Vale SA is expected to under-perform the New Oriental. In addition to that, Vale SA is 6.16 times more volatile than New Oriental Education. It trades about -0.09 of its total potential returns per unit of risk. New Oriental Education is currently generating about 0.04 per unit of volatility. If you would invest 124,300 in New Oriental Education on October 24, 2024 and sell it today you would earn a total of 1,034 from holding New Oriental Education or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Vale SA vs. New Oriental Education
Performance |
| Timeline |
| Vale SA |
| New Oriental Education |
Vale SA and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and New Oriental
The main advantage of trading using opposite Vale SA and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA 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.| Vale SA vs. DXC Technology | Vale SA vs. Capital One Financial | Vale SA vs. McEwen Mining | Vale SA vs. First Republic Bank |
| New Oriental vs. Lloyds Banking Group | New Oriental vs. Cognizant Technology Solutions | New Oriental vs. Grupo Sports World | New Oriental vs. Monster Beverage Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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