Correlation Between TAL Education and Rocket Internet

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

Diversification Opportunities for TAL Education and Rocket Internet

0.51

Correlation Coefficient

TAL Education  Rocket Internet

Very weak diversification

The 3 months correlation between TAL and Rocket is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Rocket Internet SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Internet SE 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 Rocket Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Internet SE has no effect on the direction of TAL Education i.e., TAL Education and Rocket Internet go up and down completely randomly.

Pair Corralation between TAL Education and Rocket Internet

Assuming the 90 days trading horizon TAL Education is expected to generate 1.96 times less return on investment than Rocket Internet. In addition to that, TAL Education is 1.82 times more volatile than Rocket Internet SE. It trades about 0.02 of its total potential returns per unit of risk. Rocket Internet SE is currently generating about 0.06 per unit of volatility. If you would invest  1,600  in Rocket Internet SE on April 21, 2025 and sell it today you would earn a total of  120.00  from holding Rocket Internet SE or generate 7.5% return on investment over 90 days.

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

TAL Education Group  vs.  Rocket Internet SE

TAL Education Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TAL Education Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TAL Education is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Rocket Internet SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Internet SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Rocket Internet may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with TAL Education and Rocket Internet

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

The idea behind TAL Education Group and Rocket Internet SE 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.