Correlation Between Antofagasta Plc and TAL Education

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

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

Diversification Opportunities for Antofagasta Plc and TAL Education

0.27

Correlation Coefficient

Antofagasta Plc  TAL Education

Modest diversification

The 3 months correlation between Antofagasta and TAL is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta plc 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 Antofagasta Plc 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 Antofagasta plc 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 Antofagasta Plc i.e., Antofagasta Plc and TAL Education go up and down completely randomly.

Pair Corralation between Antofagasta Plc and TAL Education

Assuming the 90 days horizon Antofagasta plc is expected to under-perform the TAL Education. But the stock apears to be less risky and, when comparing its historical volatility, Antofagasta plc is 1.89 times less risky than TAL Education. The stock trades about -0.17 of its potential returns per unit of risk. The TAL Education Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,050  in TAL Education Group on September 30, 2024 and sell it today you would lose (115.00) from holding TAL Education Group or give up 10.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Antofagasta plc  vs.  TAL Education Group

Antofagasta plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 uncertain 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 Antofagasta Plc and TAL Education

The main advantage of trading using opposite Antofagasta Plc and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antofagasta Plc 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 Antofagasta plc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.