Correlation Between Bright Scholar and 18539UAD7

Can any of the company-specific risk be diversified away by investing in both Bright Scholar and 18539UAD7 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 18539UAD7 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 US18539UAD72, you can compare the effects of market volatilities on Bright Scholar and 18539UAD7 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 18539UAD7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and 18539UAD7.

Diversification Opportunities for Bright Scholar and 18539UAD7

-0.04

Correlation Coefficient

Bright Scholar  18539UAD7

Good diversification

The 3 months correlation between Bright and 18539UAD7 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and US18539UAD72 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US18539UAD72 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 18539UAD7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US18539UAD72 has no effect on the direction of Bright Scholar i.e., Bright Scholar and 18539UAD7 go up and down completely randomly.

Pair Corralation between Bright Scholar and 18539UAD7

Given the investment horizon of 90 days Bright Scholar Education is expected to generate 7.31 times more return on investment than 18539UAD7. However, Bright Scholar is 7.31 times more volatile than US18539UAD72. It trades about 0.0 of its potential returns per unit of risk. US18539UAD72 is currently generating about -0.05 per unit of risk. If you would invest  171.00  in Bright Scholar Education on December 30, 2024 and sell it today you would lose (20.00) from holding Bright Scholar Education or give up 11.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Bright Scholar Education  vs.  US18539UAD72

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

US18539UAD72

Risk-Adjusted Performance

Very Weak

Over the last 90 days US18539UAD72 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 18539UAD7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bright Scholar and 18539UAD7

The main advantage of trading using opposite Bright Scholar and 18539UAD7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, 18539UAD7 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 18539UAD7 will offset losses from the drop in 18539UAD7's long position.

The idea behind Bright Scholar Education and US18539UAD72 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.