Correlation Between TAL Education and CITIC DAMENG

Can any of the company-specific risk be diversified away by investing in both TAL Education and CITIC DAMENG 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 CITIC DAMENG 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 CITIC DAMENG, you can compare the effects of market volatilities on TAL Education and CITIC DAMENG 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 CITIC DAMENG. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and CITIC DAMENG.

Diversification Opportunities for TAL Education and CITIC DAMENG

0.0

Correlation Coefficient

TAL Education  CITIC DAMENG

Pay attention - limited upside

The 3 months correlation between TAL and CITIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and CITIC DAMENG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC DAMENG 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 CITIC DAMENG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC DAMENG has no effect on the direction of TAL Education i.e., TAL Education and CITIC DAMENG go up and down completely randomly.

Pair Corralation between TAL Education and CITIC DAMENG

If you would invest  925.00  in TAL Education Group on December 19, 2024 and sell it today you would earn a total of  305.00  from holding TAL Education Group or generate 32.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

TAL Education Group  vs.  CITIC DAMENG

TAL Education Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TAL Education Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TAL Education unveiled solid returns over the last few months and may actually be approaching a breakup point.

CITIC DAMENG

Risk-Adjusted Performance

Very Weak

Over the last 90 days CITIC DAMENG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CITIC DAMENG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TAL Education and CITIC DAMENG

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

The idea behind TAL Education Group and CITIC DAMENG 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.