Correlation Between Ser Educacional and New Oriental

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

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

Diversification Opportunities for Ser Educacional and New Oriental

-0.45

Correlation Coefficient

Ser Educacional  New Oriental

Very good diversification

The 3 months correlation between Ser and New is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ser Educacional Sa 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 Ser Educacional 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 Ser Educacional Sa 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 Ser Educacional i.e., Ser Educacional and New Oriental go up and down completely randomly.

Pair Corralation between Ser Educacional and New Oriental

Assuming the 90 days trading horizon Ser Educacional Sa is expected to under-perform the New Oriental. In addition to that, Ser Educacional is 1.08 times more volatile than New Oriental Education. It trades about -0.52 of its total potential returns per unit of risk. New Oriental Education is currently generating about 0.17 per unit of volatility. If you would invest  2,288  in New Oriental Education on September 26, 2024 and sell it today you would earn a total of  318.00  from holding New Oriental Education or generate 13.9% return on investment over 90 days.

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

Ser Educacional Sa  vs.  New Oriental Education

Ser Educacional Sa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ser Educacional Sa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

New Oriental Education

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Oriental Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, New Oriental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ser Educacional and New Oriental

The main advantage of trading using opposite Ser Educacional and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ser Educacional 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.

The idea behind Ser Educacional Sa 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.