Correlation Between Tarena Intl and Lixiang Education

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

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

Diversification Opportunities for Tarena Intl and Lixiang Education

0.0

Correlation Coefficient

Tarena Intl  Lixiang Education

Pay attention - limited upside

The 3 months correlation between Tarena and Lixiang is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tarena Intl Adr and Lixiang Education Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixiang Education Holding and Tarena Intl 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 Intl Adr are associated (or correlated) with Lixiang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixiang Education Holding has no effect on the direction of Tarena Intl i.e., Tarena Intl and Lixiang Education go up and down completely randomly.

Pair Corralation between Tarena Intl and Lixiang Education

If you would invest  219.00  in Lixiang Education Holding on September 18, 2024 and sell it today you would earn a total of  31.00  from holding Lixiang Education Holding or generate 14.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Tarena Intl Adr  vs.  Lixiang Education Holding

Tarena Intl Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tarena Intl Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Tarena Intl is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Lixiang Education Holding

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lixiang Education Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, Lixiang Education demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tarena Intl and Lixiang Education

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

The idea behind Tarena Intl Adr and Lixiang Education Holding 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.