Correlation Between TAL Education and CenterPoint Energy

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

Diversification Opportunities for TAL Education and CenterPoint Energy

-0.27

Correlation Coefficient

TAL Education  CenterPoint Energy

Very good diversification

The 3 months correlation between TAL and CenterPoint is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy 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 CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of TAL Education i.e., TAL Education and CenterPoint Energy go up and down completely randomly.

Pair Corralation between TAL Education and CenterPoint Energy

Assuming the 90 days trading horizon TAL Education Group is expected to generate 1.61 times more return on investment than CenterPoint Energy. However, TAL Education is 1.61 times more volatile than CenterPoint Energy. It trades about 0.09 of its potential returns per unit of risk. CenterPoint Energy is currently generating about -0.04 per unit of risk. If you would invest  770.00  in TAL Education Group on April 25, 2025 and sell it today you would earn a total of  100.00  from holding TAL Education Group or generate 12.99% 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.  CenterPoint Energy

TAL Education Group

Risk-Adjusted Performance

Very Weak

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

CenterPoint Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days CenterPoint Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CenterPoint Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TAL Education and CenterPoint Energy

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

The idea behind TAL Education Group and CenterPoint Energy 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..