Correlation Between Hailiang Edu and New Oriental

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

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

Diversification Opportunities for Hailiang Edu and New Oriental

0.37
  Correlation Coefficient
Hailiang Edu Grp
New Oriental Education

Weak diversification

The 3 months correlation between Hailiang and New Oriental is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hailiang Edu Grp and New Oriental Education in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education and Hailiang Edu 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 Hailiang Edu Grp are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Hailiang Edu i.e., Hailiang Edu and New Oriental go up and down completely randomly.

Pair Corralation between Hailiang Edu and New Oriental

Considering the 90-day investment horizon Hailiang Edu Grp is expected to generate 0.19 times more return on investment than New Oriental. However, Hailiang Edu Grp is 5.22 times less risky than New Oriental. It trades about -0.19 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.12 per unit of risk. If you would invest  6,580  in Hailiang Edu Grp on July 24, 2021 and sell it today you would lose (3,490)  from holding Hailiang Edu Grp or give up 53.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Hailiang Edu Grp  vs.  New Oriental Education

 Performance (%) 
      Timeline 
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 latest fragile performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Hailiang Price Channel

New Oriental Education 
 New Oriental Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in New Oriental Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, New Oriental unveiled solid returns over the last few months and may actually be approaching a breakup point.

New Oriental Price Channel

Hailiang Edu and New Oriental Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Hailiang Edu and New Oriental

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

Hailiang Edu Grp

Pair trading matchups for Hailiang Edu

The idea behind Hailiang Edu Grp and New Oriental Education 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.

New Oriental Education

Pair trading matchups for New Oriental

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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