Correlation Between Bright Scholar and Oatly Group

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

Diversification Opportunities for Bright Scholar and Oatly Group

0.47

Correlation Coefficient

Bright Scholar  Oatly Group

Very weak diversification

The 3 months correlation between Bright and Oatly is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group AB 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 Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of Bright Scholar i.e., Bright Scholar and Oatly Group go up and down completely randomly.

Pair Corralation between Bright Scholar and Oatly Group

Given the investment horizon of 90 days Bright Scholar Education is expected to generate 1.29 times more return on investment than Oatly Group. However, Bright Scholar is 1.29 times more volatile than Oatly Group AB. It trades about -0.01 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.05 per unit of risk. If you would invest  210.00  in Bright Scholar Education on October 10, 2024 and sell it today you would lose (40.00) from holding Bright Scholar Education or give up 19.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.58%
Values	Daily Returns

Bright Scholar Education  vs.  Oatly Group AB

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 latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Oatly Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Oatly Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bright Scholar and Oatly Group

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

The idea behind Bright Scholar Education and Oatly Group AB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.