Correlation Between Jianzhi Education and New Oriental

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

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

Diversification Opportunities for Jianzhi Education and New Oriental

0.12

Correlation Coefficient

Jianzhi Education  New Oriental

Average diversification

The 3 months correlation between Jianzhi and New is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Jianzhi Education Technology and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education and Jianzhi 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 Jianzhi Education Technology are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Jianzhi Education i.e., Jianzhi Education and New Oriental go up and down completely randomly.

Pair Corralation between Jianzhi Education and New Oriental

Allowing for the 90-day total investment horizon Jianzhi Education Technology is expected to under-perform the New Oriental. In addition to that, Jianzhi Education is 1.88 times more volatile than New Oriental Education. It trades about -0.02 of its total potential returns per unit of risk. New Oriental Education is currently generating about 0.05 per unit of volatility. If you would invest  3,666  in New Oriental Education on September 26, 2024 and sell it today you would earn a total of  2,722  from holding New Oriental Education or generate 74.25% return on investment over 90 days.

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

Jianzhi Education Technology  vs.  New Oriental Education

Jianzhi Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jianzhi Education Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

New Oriental Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Oriental Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Jianzhi Education and New Oriental

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

The idea behind Jianzhi Education Technology and New Oriental Education 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.