Correlation Between Ambow Education and New Oriental

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ambow Education 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 Ambow Education and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambow Education Holding and New Oriental Education, you can compare the effects of market volatilities on Ambow Education 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 Ambow Education with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambow Education and New Oriental.

Diversification Opportunities for Ambow Education and New Oriental

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Ambow and New is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ambow Education Holding 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 Ambow 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 Ambow Education Holding 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 Ambow Education i.e., Ambow Education and New Oriental go up and down completely randomly.

Pair Corralation between Ambow Education and New Oriental

Given the investment horizon of 90 days Ambow Education Holding is expected to generate 9.18 times more return on investment than New Oriental. However, Ambow Education is 9.18 times more volatile than New Oriental Education. It trades about 0.04 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  680.00  in Ambow Education Holding on December 30, 2023 and sell it today you would lose (508.00) from holding Ambow Education Holding or give up 74.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Ambow Education Holding  vs.  New Oriental Education

 Performance 
       Timeline  
Ambow Education Holding 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ambow Education Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental drivers, Ambow Education displayed solid returns over the last few months and may actually be approaching a breakup point.
New Oriental Education 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in New Oriental Education are ranked lower than 10 (%) 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.

Ambow Education and New Oriental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ambow Education and New Oriental

The main advantage of trading using opposite Ambow Education and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambow Education 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 Ambow Education Holding 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.
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

Other Complementary Tools

Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities