Correlation Between New Oriental and Elite Education

By analyzing existing cross correlation between New Oriental Education and Elite Education Group, you can compare the effects of market volatilities on New Oriental and Elite 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 Elite Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Elite Education.

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

Diversification Opportunities for New Oriental and Elite Education

0.21
  Correlation Coefficient
New Oriental Education
Elite Education Group

Modest diversification

The 3 months correlation between New Oriental and Elite is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Elite Education Group in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Elite 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 Elite Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Education Group has no effect on the direction of New Oriental i.e., New Oriental and Elite Education go up and down completely randomly.

Pair Corralation between New Oriental and Elite Education

If you would invest (100.00)  in Elite Education Group on June 30, 2021 and sell it today you would earn a total of  100.00  from holding Elite Education Group or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy0.0%
ValuesDaily Returns

New Oriental Education  vs.  Elite Education Group

 Performance (%) 
      Timeline 
New Oriental Education 
 New Oriental Performance
0 of 100
Over the last 90 days New Oriental Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in October 2021. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Elite Education Group 
 Elite Performance
0 of 100
Over the last 90 days Elite Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Elite Education is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

New Oriental and Elite Education Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with New Oriental and Elite Education

The main advantage of trading using opposite New Oriental and Elite Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Elite 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 Elite Education will offset losses from the drop in Elite Education's long position.
The idea behind New Oriental Education and Elite Education Group 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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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