Correlation Between TAL Education and XTANT MEDICAL

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

Diversification Opportunities for TAL Education and XTANT MEDICAL

-0.14

Correlation Coefficient

TAL Education  XTANT MEDICAL

Good diversification

The 3 months correlation between TAL and XTANT is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and XTANT MEDICAL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTANT MEDICAL HLDGS 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 XTANT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTANT MEDICAL HLDGS has no effect on the direction of TAL Education i.e., TAL Education and XTANT MEDICAL go up and down completely randomly.

Pair Corralation between TAL Education and XTANT MEDICAL

Assuming the 90 days trading horizon TAL Education is expected to generate 12.95 times less return on investment than XTANT MEDICAL. But when comparing it to its historical volatility, TAL Education Group is 3.45 times less risky than XTANT MEDICAL. It trades about 0.09 of its potential returns per unit of risk. XTANT MEDICAL HLDGS is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  34.00  in XTANT MEDICAL HLDGS on October 22, 2024 and sell it today you would earn a total of  14.00  from holding XTANT MEDICAL HLDGS or generate 41.18% 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.  XTANT MEDICAL HLDGS

TAL Education Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TAL Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TAL Education is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

XTANT MEDICAL HLDGS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XTANT MEDICAL HLDGS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, XTANT MEDICAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TAL Education and XTANT MEDICAL

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

The idea behind TAL Education Group and XTANT MEDICAL HLDGS 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.