Correlation Between BTG Pactual and New Oriental

Can any of the company-specific risk be diversified away by investing in both BTG Pactual 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 BTG Pactual and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BTG Pactual Logstica and New Oriental Education, you can compare the effects of market volatilities on BTG Pactual 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 BTG Pactual with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTG Pactual and New Oriental.

Diversification Opportunities for BTG Pactual and New Oriental

-0.22

Correlation Coefficient

BTG Pactual  New Oriental

Very good diversification

The 3 months correlation between BTG and New is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica 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 BTG Pactual 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 BTG Pactual Logstica 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 BTG Pactual i.e., BTG Pactual and New Oriental go up and down completely randomly.

Pair Corralation between BTG Pactual and New Oriental

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to generate 0.17 times more return on investment than New Oriental. However, BTG Pactual Logstica is 5.83 times less risky than New Oriental. It trades about 0.09 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.12 per unit of risk. If you would invest  9,386  in BTG Pactual Logstica on December 30, 2024 and sell it today you would earn a total of  363.00  from holding BTG Pactual Logstica or generate 3.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BTG Pactual Logstica  vs.  New Oriental Education

BTG Pactual Logstica

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BTG Pactual Logstica are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong essential indicators, BTG Pactual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

New Oriental Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Oriental Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BTG Pactual and New Oriental

The main advantage of trading using opposite BTG Pactual and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTG Pactual 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.

The idea behind BTG Pactual Logstica and New Oriental Education pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.