Correlation Between Golden Sun and New Oriental

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

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

Diversification Opportunities for Golden Sun and New Oriental

0.68

Correlation Coefficient

Golden Sun  New Oriental

Poor diversification

The 3 months correlation between Golden and New is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Golden Sun Education 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 Golden Sun 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 Golden Sun Education 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 Golden Sun i.e., Golden Sun and New Oriental go up and down completely randomly.

Pair Corralation between Golden Sun and New Oriental

Given the investment horizon of 90 days Golden Sun Education is expected to generate 2.87 times more return on investment than New Oriental. However, Golden Sun is 2.87 times more volatile than New Oriental Education. It trades about 0.02 of its potential returns per unit of risk. New Oriental Education is currently generating about 0.03 per unit of risk. If you would invest  281.00  in Golden Sun Education on October 14, 2024 and sell it today you would lose (2.00) from holding Golden Sun Education or give up 0.71% of portfolio value over 90 days.

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

Golden Sun Education  vs.  New Oriental Education

Golden Sun Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Sun Education 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Golden Sun and New Oriental

The main advantage of trading using opposite Golden Sun and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Sun 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 Golden Sun Education 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.