Correlation Between New Oriental and First High

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

Diversification Opportunities for New Oriental and First High

0.0

Correlation Coefficient

New Oriental  First High

Pay attention - limited upside

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

Pair Corralation between New Oriental and First High

If you would invest (100.00) in First High School on January 20, 2024 and sell it today you would earn a total of  100.00  from holding First High School or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

New Oriental Education  vs.  First High School

New Oriental Education

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Oriental Education are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, New Oriental unveiled solid returns over the last few months and may actually be approaching a breakup point.

First High School

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with New Oriental and First High

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

The idea behind New Oriental Education and First High School 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 the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.