Correlation Between New Oriental and Hailiang Edu

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

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

Diversification Opportunities for New Oriental and Hailiang Edu

0.66
  Correlation Coefficient
New Oriental Education
Hailiang Edu Grp

Poor diversification

The 3 months correlation between New Oriental and Hailiang is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Hailiang Edu Grp in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Hailiang Edu Grp 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 Hailiang Edu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hailiang Edu Grp has no effect on the direction of New Oriental i.e., New Oriental and Hailiang Edu go up and down completely randomly.

Pair Corralation between New Oriental and Hailiang Edu

Considering the 90-day investment horizon New Oriental Education is expected to generate 3.1 times more return on investment than Hailiang Edu. However, New Oriental is 3.1 times more volatile than Hailiang Edu Grp. It trades about 0.1 of its potential returns per unit of risk. Hailiang Edu Grp is currently generating about -0.17 per unit of risk. If you would invest  195.00  in New Oriental Education on July 19, 2021 and sell it today you would earn a total of  43.00  from holding New Oriental Education or generate 22.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

New Oriental Education  vs.  Hailiang Edu Grp

 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 weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in November 2021. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

New Oriental Price Channel

Hailiang Edu Grp 
 Hailiang Performance
0 of 100
Over the last 90 days Hailiang Edu Grp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in November 2021. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hailiang Price Channel

New Oriental and Hailiang Edu Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with New Oriental and Hailiang Edu

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

New Oriental Education

Pair trading matchups for New Oriental

The idea behind New Oriental Education and Hailiang Edu Grp 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.

Hailiang Edu Grp

Pair trading matchups for Hailiang Edu

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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