Correlation Between TAL Education and TechnipFMC Plc

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

Diversification Opportunities for TAL Education and TechnipFMC Plc

0.31

Correlation Coefficient

TAL Education  TechnipFMC Plc

Weak diversification

The 3 months correlation between TAL and TechnipFMC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and TechnipFMC plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC plc 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 TechnipFMC Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC plc has no effect on the direction of TAL Education i.e., TAL Education and TechnipFMC Plc go up and down completely randomly.

Pair Corralation between TAL Education and TechnipFMC Plc

Assuming the 90 days trading horizon TAL Education is expected to generate 1.95 times less return on investment than TechnipFMC Plc. In addition to that, TAL Education is 2.65 times more volatile than TechnipFMC plc. It trades about 0.02 of its total potential returns per unit of risk. TechnipFMC plc is currently generating about 0.11 per unit of volatility. If you would invest  16,773  in TechnipFMC plc on April 20, 2025 and sell it today you would earn a total of  1,727  from holding TechnipFMC plc or generate 10.3% return on investment over 90 days.

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

TAL Education Group  vs.  TechnipFMC plc

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. Despite somewhat strong basic indicators, TAL Education is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TechnipFMC plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, TechnipFMC Plc may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with TAL Education and TechnipFMC Plc

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

The idea behind TAL Education Group and TechnipFMC plc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.