Correlation Between Ihuman and TAL Education

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

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

Diversification Opportunities for Ihuman and TAL Education

0.69

Correlation Coefficient

Ihuman  TAL Education

Poor diversification

The 3 months correlation between Ihuman and TAL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc 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 Ihuman 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 Ihuman Inc 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 Ihuman i.e., Ihuman and TAL Education go up and down completely randomly.

Pair Corralation between Ihuman and TAL Education

Allowing for the 90-day total investment horizon Ihuman Inc is expected to generate 0.83 times more return on investment than TAL Education. However, Ihuman Inc is 1.2 times less risky than TAL Education. It trades about 0.21 of its potential returns per unit of risk. TAL Education Group is currently generating about 0.01 per unit of risk. If you would invest  163.00  in Ihuman Inc on September 19, 2024 and sell it today you would earn a total of  18.00  from holding Ihuman Inc or generate 11.04% return on investment over 90 days.

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

Ihuman Inc  vs.  TAL Education Group

Ihuman Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, Ihuman demonstrated solid returns over the last few months and may actually be approaching a breakup point.

TAL Education Group

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TAL Education Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, TAL Education disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ihuman and TAL Education

The main advantage of trading using opposite Ihuman and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ihuman 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 Ihuman Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.