Correlation Between Bright Scholar and Lucid

Can any of the company-specific risk be diversified away by investing in both Bright Scholar and Lucid 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 Bright Scholar and Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bright Scholar Education and Lucid Group, you can compare the effects of market volatilities on Bright Scholar and Lucid 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 Bright Scholar with a short position of Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Lucid.

Diversification Opportunities for Bright Scholar and Lucid

0.57

Correlation Coefficient

Bright Scholar  Lucid

Very weak diversification

The 3 months correlation between Bright and Lucid is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Bright Scholar 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 Bright Scholar Education are associated (or correlated) with Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Bright Scholar i.e., Bright Scholar and Lucid go up and down completely randomly.

Pair Corralation between Bright Scholar and Lucid

Given the investment horizon of 90 days Bright Scholar Education is expected to generate 0.98 times more return on investment than Lucid. However, Bright Scholar Education is 1.02 times less risky than Lucid. It trades about 0.01 of its potential returns per unit of risk. Lucid Group is currently generating about 0.0 per unit of risk. If you would invest  236.00  in Bright Scholar Education on September 24, 2024 and sell it today you would lose (51.00) from holding Bright Scholar Education or give up 21.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Bright Scholar Education  vs.  Lucid Group

Bright Scholar Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lucid Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucid Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Bright Scholar and Lucid

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

The idea behind Bright Scholar Education and Lucid Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.