Correlation Between Learning Tree and Tarena International

Can any of the company-specific risk be diversified away by investing in both Learning Tree and Tarena International 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 Learning Tree and Tarena International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Learning Tree International and Tarena International, you can compare the effects of market volatilities on Learning Tree and Tarena International 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 Learning Tree with a short position of Tarena International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Learning Tree and Tarena International.

Diversification Opportunities for Learning Tree and Tarena International

-0.56

Correlation Coefficient

Learning Tree  Tarena International

Excellent diversification

The 3 months correlation between Learning and Tarena is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Learning Tree International and Tarena International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarena International and Learning Tree 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 Learning Tree International are associated (or correlated) with Tarena International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarena International has no effect on the direction of Learning Tree i.e., Learning Tree and Tarena International go up and down completely randomly.

Pair Corralation between Learning Tree and Tarena International

If you would invest  105.00  in Learning Tree International on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Learning Tree International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Learning Tree International  vs.  Tarena International

Learning Tree Intern

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tarena International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tarena International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Learning Tree and Tarena International

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

The idea behind Learning Tree International and Tarena International 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.