Correlation Between New Oriental and Fibra UNO

Can any of the company-specific risk be diversified away by investing in both New Oriental and Fibra UNO 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 Fibra UNO 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 Fibra UNO, you can compare the effects of market volatilities on New Oriental and Fibra UNO 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 Fibra UNO. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Fibra UNO.

Diversification Opportunities for New Oriental and Fibra UNO

-0.62

Correlation Coefficient

New Oriental  Fibra UNO

Excellent diversification

The 3 months correlation between New and Fibra is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Fibra UNO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra UNO 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 Fibra UNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra UNO has no effect on the direction of New Oriental i.e., New Oriental and Fibra UNO go up and down completely randomly.

Pair Corralation between New Oriental and Fibra UNO

Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Fibra UNO. In addition to that, New Oriental is 1.66 times more volatile than Fibra UNO. It trades about -0.13 of its total potential returns per unit of risk. Fibra UNO is currently generating about 0.17 per unit of volatility. If you would invest  2,064  in Fibra UNO on December 30, 2024 and sell it today you would earn a total of  379.00  from holding Fibra UNO or generate 18.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

New Oriental Education  vs.  Fibra UNO

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. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly 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.

Fibra UNO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fibra UNO are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fibra UNO sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Oriental and Fibra UNO

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

The idea behind New Oriental Education and Fibra UNO 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.