Correlation Between Graham Holdings and New Oriental

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

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

Diversification Opportunities for Graham Holdings and New Oriental

-0.71

Correlation Coefficient

Graham Holdings  New Oriental

Pay attention - limited upside

The 3 months correlation between Graham and New is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co 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 Graham Holdings 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 Graham Holdings Co 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 Graham Holdings i.e., Graham Holdings and New Oriental go up and down completely randomly.

Pair Corralation between Graham Holdings and New Oriental

Considering the 90-day investment horizon Graham Holdings Co is expected to generate 0.37 times more return on investment than New Oriental. However, Graham Holdings Co is 2.67 times less risky than New Oriental. It trades about 0.13 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.09 per unit of risk. If you would invest  87,106  in Graham Holdings Co on December 28, 2024 and sell it today you would earn a total of  10,211  from holding Graham Holdings Co or generate 11.72% return on investment over 90 days.

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

Graham Holdings Co  vs.  New Oriental Education

Graham Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Graham Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Graham Holdings and New Oriental

The main advantage of trading using opposite Graham Holdings and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham Holdings 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 Graham Holdings Co 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.