Correlation Between TAL Education and Boiron SA

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

By analyzing existing cross correlation between TAL Education Group and Boiron SA, you can compare the effects of market volatilities on TAL Education and Boiron SA 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 TAL Education with a short position of Boiron SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Boiron SA.

Diversification Opportunities for TAL Education and Boiron SA

-0.06

Correlation Coefficient

TAL Education  Boiron SA

Good diversification

The 3 months correlation between TAL and Boiron is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA and TAL Education 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 TAL Education Group are associated (or correlated) with Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of TAL Education i.e., TAL Education and Boiron SA go up and down completely randomly.

Pair Corralation between TAL Education and Boiron SA

Assuming the 90 days trading horizon TAL Education Group is expected to generate 2.21 times more return on investment than Boiron SA. However, TAL Education is 2.21 times more volatile than Boiron SA. It trades about 0.05 of its potential returns per unit of risk. Boiron SA is currently generating about -0.01 per unit of risk. If you would invest  520.00  in TAL Education Group on September 1, 2024 and sell it today you would earn a total of  445.00  from holding TAL Education Group or generate 85.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TAL Education Group  vs.  Boiron SA

TAL Education Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TAL Education Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, TAL Education unveiled solid returns over the last few months and may actually be approaching a breakup point.

Boiron SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boiron SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TAL Education and Boiron SA

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

The idea behind TAL Education Group and Boiron SA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.