Correlation Between TAL Education and Vasta Platform

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

Diversification Opportunities for TAL Education and Vasta Platform

0.74

Correlation Coefficient

TAL Education  Vasta Platform

Poor diversification

The 3 months correlation between TAL and Vasta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Vasta Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vasta Platform 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 Vasta Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vasta Platform has no effect on the direction of TAL Education i.e., TAL Education and Vasta Platform go up and down completely randomly.

Pair Corralation between TAL Education and Vasta Platform

Considering the 90-day investment horizon TAL Education is expected to generate 1.65 times less return on investment than Vasta Platform. In addition to that, TAL Education is 1.15 times more volatile than Vasta Platform. It trades about 0.13 of its total potential returns per unit of risk. Vasta Platform is currently generating about 0.25 per unit of volatility. If you would invest  240.00  in Vasta Platform on December 27, 2024 and sell it today you would earn a total of  163.00  from holding Vasta Platform or generate 67.92% return on investment over 90 days.

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

TAL Education Group  vs.  Vasta Platform

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 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, TAL Education disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vasta Platform

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vasta Platform sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TAL Education and Vasta Platform

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

The idea behind TAL Education Group and Vasta Platform 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.