Correlation Between Bright Scholar and Sun Country

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

Diversification Opportunities for Bright Scholar and Sun Country

-0.38

Correlation Coefficient

Bright Scholar  Sun Country

Very good diversification

The 3 months correlation between Bright and Sun is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines 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 Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Bright Scholar i.e., Bright Scholar and Sun Country go up and down completely randomly.

Pair Corralation between Bright Scholar and Sun Country

Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the Sun Country. In addition to that, Bright Scholar is 1.54 times more volatile than Sun Country Airlines. It trades about -0.03 of its total potential returns per unit of risk. Sun Country Airlines is currently generating about 0.1 per unit of volatility. If you would invest  1,119  in Sun Country Airlines on December 5, 2024 and sell it today you would earn a total of  430.50  from holding Sun Country Airlines or generate 38.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Bright Scholar Education  vs.  Sun Country Airlines

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 uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sun Country Airlines

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Sun Country may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bright Scholar and Sun Country

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

The idea behind Bright Scholar Education and Sun Country Airlines 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.