Correlation Between TAL Education and Applied Materials,

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

Diversification Opportunities for TAL Education and Applied Materials,

0.26

Correlation Coefficient

TAL Education  Applied Materials,

Modest diversification

The 3 months correlation between TAL and Applied is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Applied Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials, 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 Applied Materials,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials, has no effect on the direction of TAL Education i.e., TAL Education and Applied Materials, go up and down completely randomly.

Pair Corralation between TAL Education and Applied Materials,

Assuming the 90 days trading horizon TAL Education Group is expected to under-perform the Applied Materials,. But the stock apears to be less risky and, when comparing its historical volatility, TAL Education Group is 1.01 times less risky than Applied Materials,. The stock trades about -0.05 of its potential returns per unit of risk. The Applied Materials, is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  10,400  in Applied Materials, on October 22, 2024 and sell it today you would earn a total of  1,237  from holding Applied Materials, or generate 11.89% return on investment over 90 days.

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

TAL Education Group  vs.  Applied Materials,

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. Despite somewhat strong basic indicators, TAL Education is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Applied Materials,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Applied Materials, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TAL Education and Applied Materials,

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

The idea behind TAL Education Group and Applied Materials, 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.