Correlation Between TAL Education and Gaztransport Technigaz

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

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

Diversification Opportunities for TAL Education and Gaztransport Technigaz

-0.1

Correlation Coefficient

TAL Education  Gaztransport Technigaz

Good diversification

The 3 months correlation between TAL and Gaztransport is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and TAL Education 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 TAL Education Group are associated (or correlated) with Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of TAL Education i.e., TAL Education and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between TAL Education and Gaztransport Technigaz

Assuming the 90 days horizon TAL Education Group is expected to generate 2.52 times more return on investment than Gaztransport Technigaz. However, TAL Education is 2.52 times more volatile than Gaztransport Technigaz SA. It trades about 0.04 of its potential returns per unit of risk. Gaztransport Technigaz SA is currently generating about 0.05 per unit of risk. If you would invest  662.00  in TAL Education Group on September 24, 2024 and sell it today you would earn a total of  263.00  from holding TAL Education Group or generate 39.73% return on investment over 90 days.

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

TAL Education Group  vs.  Gaztransport Technigaz SA

TAL Education Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TAL Education Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TAL Education reported solid returns over the last few months and may actually be approaching a breakup point.

Gaztransport Technigaz

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaztransport Technigaz is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TAL Education and Gaztransport Technigaz

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

The idea behind TAL Education Group and Gaztransport Technigaz SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.