Correlation Between Bright Scholar and Quality Online

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

Diversification Opportunities for Bright Scholar and Quality Online

-0.44

Correlation Coefficient

Bright Scholar  Quality Online

Very good diversification

The 3 months correlation between Bright and Quality is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Quality Online Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Online Education 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 Quality Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Online Education has no effect on the direction of Bright Scholar i.e., Bright Scholar and Quality Online go up and down completely randomly.

Pair Corralation between Bright Scholar and Quality Online

Given the investment horizon of 90 days Bright Scholar is expected to generate 33.53 times less return on investment than Quality Online. But when comparing it to its historical volatility, Bright Scholar Education is 27.14 times less risky than Quality Online. It trades about 0.09 of its potential returns per unit of risk. Quality Online Education is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.22  in Quality Online Education on September 19, 2024 and sell it today you would lose (0.14) from holding Quality Online Education or give up 63.64% of portfolio value over 90 days.

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

Bright Scholar Education  vs.  Quality Online Education

Bright Scholar Education

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Scholar Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Quality Online Education

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quality Online Education are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Quality Online reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bright Scholar and Quality Online

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

The idea behind Bright Scholar Education and Quality Online Education 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.