Correlation Between Cass Information and TAL Education

Can any of the company-specific risk be diversified away by investing in both Cass Information and TAL 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 Cass Information and TAL Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cass Information Systems and TAL Education Group, you can compare the effects of market volatilities on Cass Information and TAL 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 Cass Information with a short position of TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and TAL Education.

Diversification Opportunities for Cass Information and TAL Education

-0.27

Correlation Coefficient

Cass Information  TAL Education

Very good diversification

The 3 months correlation between Cass and TAL is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group and Cass Information 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 Cass Information Systems are associated (or correlated) with TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of Cass Information i.e., Cass Information and TAL Education go up and down completely randomly.

Pair Corralation between Cass Information and TAL Education

Assuming the 90 days horizon Cass Information is expected to generate 30.65 times less return on investment than TAL Education. But when comparing it to its historical volatility, Cass Information Systems is 2.28 times less risky than TAL Education. It trades about 0.0 of its potential returns per unit of risk. TAL Education Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  744.00  in TAL Education Group on October 10, 2024 and sell it today you would earn a total of  176.00  from holding TAL Education Group or generate 23.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Cass Information Systems  vs.  TAL Education Group

Cass Information Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TAL Education Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TAL Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cass Information and TAL Education

The main advantage of trading using opposite Cass Information and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, TAL 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 TAL Education will offset losses from the drop in TAL Education's long position.

The idea behind Cass Information Systems and TAL Education Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.