Correlation Between Tarena International and Udemy

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

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

Diversification Opportunities for Tarena International and Udemy

-0.52

Correlation Coefficient

Tarena International  Udemy

Excellent diversification

The 3 months correlation between Tarena and Udemy is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tarena International and Udemy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Udemy Inc and Tarena International 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 Tarena International are associated (or correlated) with Udemy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Udemy Inc has no effect on the direction of Tarena International i.e., Tarena International and Udemy go up and down completely randomly.

Pair Corralation between Tarena International and Udemy

Given the investment horizon of 90 days Tarena International is expected to under-perform the Udemy. In addition to that, Tarena International is 1.51 times more volatile than Udemy Inc. It trades about -0.16 of its total potential returns per unit of risk. Udemy Inc is currently generating about 0.04 per unit of volatility. If you would invest  784.00  in Udemy Inc on September 1, 2024 and sell it today you would earn a total of  12.00  from holding Udemy Inc or generate 1.53% return on investment over 90 days.

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

Tarena International  vs.  Udemy Inc

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 conflicting 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.

Udemy Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Udemy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Udemy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tarena International and Udemy

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

The idea behind Tarena International and Udemy Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.