Correlation Between New Oriental and TAL Education
Can any of the company-specific risk be diversified away by investing in both New Oriental and TAL 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 New Oriental and TAL Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and TAL Education Group, you can compare the effects of market volatilities on New Oriental and TAL 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 New Oriental with a short position of TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and TAL Education.
Diversification Opportunities for New Oriental and TAL Education
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between New and TAL is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group and New Oriental 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 New Oriental Education are associated (or correlated) with TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of New Oriental i.e., New Oriental and TAL Education go up and down completely randomly.
Pair Corralation between New Oriental and TAL Education
Considering the 90-day investment horizon New Oriental is expected to generate 2.31 times less return on investment than TAL Education. In addition to that, New Oriental is 1.05 times more volatile than TAL Education Group. It trades about 0.02 of its total potential returns per unit of risk. TAL Education Group is currently generating about 0.06 per unit of volatility. If you would invest 1,050 in TAL Education Group on July 11, 2025 and sell it today you would earn a total of 73.00 from holding TAL Education Group or generate 6.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. TAL Education Group
Performance |
| Timeline |
| New Oriental Education |
| TAL Education Group |
New Oriental and TAL Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and TAL Education
The main advantage of trading using opposite New Oriental and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, TAL 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 TAL Education will offset losses from the drop in TAL Education's long position.| New Oriental vs. TAL Education Group | New Oriental vs. Gaotu Techedu DRC | New Oriental vs. 17 Education Technology | New Oriental vs. Chegg Inc |
| TAL Education vs. New Oriental Education | TAL Education vs. Gaotu Techedu DRC | TAL Education vs. 17 Education Technology | TAL Education vs. Chegg Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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