Correlation Between New Oriental and Pure Storage,

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

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

Diversification Opportunities for New Oriental and Pure Storage,

0.31

Correlation Coefficient

New Oriental  Pure Storage,

Weak diversification

The 3 months correlation between New and Pure is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Pure Storage, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage, and New Oriental 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 New Oriental Education are associated (or correlated) with Pure Storage,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage, has no effect on the direction of New Oriental i.e., New Oriental and Pure Storage, go up and down completely randomly.

Pair Corralation between New Oriental and Pure Storage,

Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Pure Storage,. But the stock apears to be less risky and, when comparing its historical volatility, New Oriental Education is 1.3 times less risky than Pure Storage,. The stock trades about -0.01 of its potential returns per unit of risk. The Pure Storage, is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,308  in Pure Storage, on October 24, 2024 and sell it today you would earn a total of  6,232  from holding Pure Storage, or generate 144.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

New Oriental Education  vs.  Pure Storage,

New Oriental Education

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pure Storage,

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage, are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pure Storage, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Oriental and Pure Storage,

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

The idea behind New Oriental Education and Pure Storage, 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.