Correlation Between TAL Education and Advanced Medical

Can any of the company-specific risk be diversified away by investing in both TAL Education and Advanced Medical 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 Advanced Medical 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 Advanced Medical Solutions, you can compare the effects of market volatilities on TAL Education and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Advanced Medical.

Diversification Opportunities for TAL Education and Advanced Medical

0.14

Correlation Coefficient

TAL Education  Advanced Medical

Average diversification

The 3 months correlation between TAL and Advanced is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of TAL Education i.e., TAL Education and Advanced Medical go up and down completely randomly.

Pair Corralation between TAL Education and Advanced Medical

Assuming the 90 days trading horizon TAL Education Group is expected to under-perform the Advanced Medical. In addition to that, TAL Education is 1.49 times more volatile than Advanced Medical Solutions. It trades about -0.02 of its total potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.08 per unit of volatility. If you would invest  208.00  in Advanced Medical Solutions on April 24, 2025 and sell it today you would earn a total of  24.00  from holding Advanced Medical Solutions or generate 11.54% return on investment over 90 days.

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

TAL Education Group  vs.  Advanced Medical Solutions

TAL Education Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days TAL Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TAL Education is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Advanced Medical Sol

Risk-Adjusted Performance

OK

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

Pair Trading with TAL Education and Advanced Medical

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

The idea behind TAL Education Group and Advanced Medical Solutions 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.