Correlation Between TAL Education and CANADA RARE

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

Diversification Opportunities for TAL Education and CANADA RARE

-0.38

Correlation Coefficient

TAL Education  CANADA RARE

Very good diversification

The 3 months correlation between TAL and CANADA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and CANADA RARE EARTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANADA RARE EARTH 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 CANADA RARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANADA RARE EARTH has no effect on the direction of TAL Education i.e., TAL Education and CANADA RARE go up and down completely randomly.

Pair Corralation between TAL Education and CANADA RARE

Assuming the 90 days trading horizon TAL Education Group is expected to generate 0.31 times more return on investment than CANADA RARE. However, TAL Education Group is 3.19 times less risky than CANADA RARE. It trades about 0.14 of its potential returns per unit of risk. CANADA RARE EARTH is currently generating about 0.01 per unit of risk. If you would invest  935.00  in TAL Education Group on December 20, 2024 and sell it today you would earn a total of  335.00  from holding TAL Education Group or generate 35.83% 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.  CANADA RARE EARTH

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 11 (%) 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.

CANADA RARE EARTH

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CANADA RARE EARTH are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CANADA RARE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TAL Education and CANADA RARE

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

The idea behind TAL Education Group and CANADA RARE EARTH 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.