Correlation Between Bright Scholar and Noranda Aluminum

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

Diversification Opportunities for Bright Scholar and Noranda Aluminum

0.0

Correlation Coefficient

Bright Scholar  Noranda Aluminum

Pay attention - limited upside

The 3 months correlation between Bright and Noranda is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Noranda Aluminum Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noranda Aluminum Holding 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 Noranda Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noranda Aluminum Holding has no effect on the direction of Bright Scholar i.e., Bright Scholar and Noranda Aluminum go up and down completely randomly.

Pair Corralation between Bright Scholar and Noranda Aluminum

If you would invest (100.00) in Noranda Aluminum Holding on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Noranda Aluminum Holding or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bright Scholar Education  vs.  Noranda Aluminum Holding

Bright Scholar Education

Risk-Adjusted Performance

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Noranda Aluminum Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Noranda Aluminum Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Noranda Aluminum is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bright Scholar and Noranda Aluminum

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

The idea behind Bright Scholar Education and Noranda Aluminum Holding 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.