New Oriental Stock Volatility

EDU -  USA Stock  

USD 1.58  0.12  7.06%

New Oriental Education has Sharpe Ratio of -0.11, which conveys that the firm had -0.11% of return per unit of risk over the last 3 months. Macroaxis standpoint towards estimating the risk of any stock is to look at both systematic and unsystematic factors of the business, including all available market data and technical indicators. New Oriental exposes twenty-seven different technical indicators, which can help you to evaluate volatility that cannot be diversified away. Please be advised to verify New Oriental Education mean deviation of 3.3, and Risk Adjusted Performance of (0.07) to check out the risk estimate we provide.

New Oriental Volatility 

 
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New Oriental Stock volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of New Oriental daily returns, and it is calculated using variance and standard deviation. We also use New Oriental's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of New Oriental volatility.

30 Days Market Risk

Very risky

Chance of Distress

Below Average

30 Days Economic Sensitivity

Almost mirrors the market
Since volatility provides investors with entry points to take advantage of stock prices, companies, such as New Oriental can benefit from it. Downward market volatility can be a perfect environment for investors who play the long game. Here, they may decide to buy additional stocks of New Oriental at lower prices. For example, an investor can purchase New Oriental stock that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of New Oriental's stock rises, investors can sell out and invest the proceeds in other equities with better opportunities. Investing when markets are volatile with better valuations will accord both investors and companies the opportunity to generate better long-term returns.

New Oriental Market Sensitivity And Downside Risk

New Oriental's beta coefficient measures the volatility of New Oriental stock compared to the systematic risk of the entire stock market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents New Oriental stock's returns against your selected market. In other words, New Oriental's beta of 1.05 provides an investor with an approximation of how much risk New Oriental stock can potentially add to one of your existing portfolios.
Let's try to break down what New Oriental's beta means in this case. New Oriental returns are very sensitive to returns on the market. As the market goes up or down, New Oriental is expected to follow.
3 Months Beta |Analyze New Oriental Education Demand Trend
Check current 90 days New Oriental correlation with market (DOW)

New Oriental Beta

    
  1.05  
New Oriental standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. Typical volatile equity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.

Standard Deviation

    
  4.4  
It is essential to understand the difference between upside risk (as represented by New Oriental's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of New Oriental stock's daily returns or price. Since the actual investment returns on holding a position in New Oriental stock tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in New Oriental.

New Oriental Implied Volatility

    
  162.51  
New Oriental's implied volatility exposes the market's sentiment of New Oriental Education stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if New Oriental's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that New Oriental stock will not fluctuate a lot when New Oriental's options are near their expiration.

New Oriental Education Stock Volatility Analysis

Volatility refers to the frequency at which New Oriental stock price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with New Oriental's price changes. Investors will then calculate the volatility of New Oriental's stock to predict their future moves. A stock that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A stock with relatively stable price changes has low volatility. A highly volatile stock is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of New Oriental's volatility:

Historical Volatility

This type of stock volatility measures New Oriental's fluctuations based on previous trends. It's commonly used to predict New Oriental's future behavior based on its past. However, it cannot conclusively determine the future direction of the stock.

Implied Volatility

This type of volatility provides a positive outlook on future price fluctuations for New Oriental's current market price. This means that the stock will return to its initially predicted market price.
Transformation
The output start index for this execution was zero with a total number of output elements of sixty-one. The Median Price line plots median indexes of New Oriental Education price series. View also all equity analysis or get more info about median price price transform indicator.

New Oriental Projected Return Density Against Market

Considering the 90-day investment horizon the stock has the beta coefficient of 1.0508 suggesting New Oriental Education market returns are related to returns on the market. As the market goes up or down, New Oriental is expected to follow.
Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to New Oriental or Consumer Defensive sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that New Oriental stock's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a New Oriental stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
The company has a negative alpha, implying that the risk taken by holding this instrument is not justified. New Oriental Education is significantly underperforming DOW.
 Predicted Return Density 
      Returns 
New Oriental's volatility is measured either by using standard deviation or beta. Standard deviation will reflect the average amount of how New Oriental stock's price will differ from the mean after some time.To get its calculation, you should first determine the mean price during the specified period then subtract that from each price point.

What Drives a Company's Stock Price Volatility?

Several factors can influence a company's stock volatility:

Industry

Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.

Political and Economic environment

When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.

The Company's Performance

Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.

New Oriental Stock Risk Measures

Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to New Oriental or Consumer Defensive sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that New Oriental stock's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a New Oriental stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
Considering the 90-day investment horizon the coefficient of variation of New Oriental is -912.35. The daily returns are distributed with a variance of 19.39 and standard deviation of 4.4. The mean deviation of New Oriental Education is currently at 3.37. For similar time horizon, the selected benchmark (DOW) has volatility of 0.82
α
Alpha over DOW
-0.38
β
Beta against DOW1.05
σ
Overall volatility
4.40
Ir
Information ratio -0.09

New Oriental Stock Return Volatility

New Oriental historical daily return volatility represents how much New Oriental stock's price daily returns swing around its mean daily price change - it is a statistical measure of its dispersion of returns. The firm has volatility of 4.4034% on return distribution over 90 days investment horizon. By contrast, DOW inherits 0.8382% risk (volatility on return distribution) over the 90 days horizon.
 Performance (%) 
      Timeline 

About New Oriental Volatility

Volatility is a rate at which the price of New Oriental or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of New Oriental may increase or decrease. In other words, similar to New Oriental's beta indicator, it measures the risk of New Oriental and helps estimate the fluctuations that may happen in a short period of time. So if prices of New Oriental fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.
Last ReportedProjected for 2022
Market Capitalization19.9 B15.9 B
New Oriental Education Technology Group Inc. provides private educational services under the New Oriental brand in the Peoples Republic of China. The company was founded in 1993 and is headquartered in Beijing, the Peoples Republic of China. New Oriental operates under Education Training Services classification in the United States and is traded on New York Stock Exchange. It employs 88126 people.

Nearest New Oriental long CALL Option Payoff at Expiration

New Oriental's implied volatility is one of the determining factors in the pricing options written on New Oriental Education. Implied volatility approximates the future value of New Orientalusing the option's current value. Options with high implied volatility have higher premiums and can be used to hedge the downside of investing in New Oriental Education over a specific time period.
View All New Oriental options
2022-01-21 CALL at $1.0 is a CALL option contract on New Oriental's common stock with a strick price of 1.0 expiring on 2022-01-21. The contract was last traded on 2022-01-18 at 10:58:03 for $0.72 and, as of today, has 0 days remaining before the expiration. The option is currently trading at a bid price of $0.66, and an ask price of $0.8. The implied volatility as of the 21st of January is 789.061.
 Profit 
Share
      New Oriental Price At Expiration 

New Oriental Investment Opportunity

New Oriental Education has a volatility of 4.4 and is 5.24 times more volatile than DOW. 37  of all equities and portfolios are less risky than New Oriental. Compared to the overall equity markets, volatility of historical daily returns of New Oriental Education is lower than 37 () of all global equities and portfolios over the last 90 days. Use New Oriental Education to protect your portfolios against small market fluctuations. The stock experiences a very speculative upward sentiment. Check odds of New Oriental to be traded at $1.501 in 90 days. . Let's try to break down what New Oriental's beta means in this case. New Oriental returns are very sensitive to returns on the market. As the market goes up or down, New Oriental is expected to follow.

Modest diversification

The correlation between New Oriental Education and DJI is Modest diversification for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and DJI in the same portfolio assuming nothing else is changed.

New Oriental Additional Risk Indicators

The analysis of New Oriental's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in New Oriental's investment and either accepting that risk or mitigating it. Along with some common measures of New Oriental stock risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
Risk Adjusted Performance(0.07)
Market Risk Adjusted Performance(0.38)
Mean Deviation3.3
Coefficient Of Variation(1,066)
Standard Deviation4.31
Variance18.61
Information Ratio(0.09)
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stock investments, we recommend comparing similar equities with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.

New Oriental Suggested Diversification Pairs

Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against New Oriental as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. New Oriental's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, New Oriental's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to New Oriental Education.
Continue to Investing Opportunities. Note that the New Oriental Education information on this page should be used as a complementary analysis to other New Oriental's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Transaction History module to view history of all your transactions and understand their impact on performance.

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Is New Oriental's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of New Oriental. If investors know New Oriental will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about New Oriental listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of New Oriental Education is measured differently than its book value, which is the value of New Oriental that is recorded on the company's balance sheet. Investors also form their own opinion of New Oriental's value that differs from its market value or its book value, called intrinsic value, which is New Oriental's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because New Oriental's market value can be influenced by many factors that don't directly affect New Oriental's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between New Oriental's value and its price as these two are different measures arrived at by different means. Investors typically determine New Oriental value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, New Oriental's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.