Correlation Between Bright Scholar and 191216CX6

Can any of the company-specific risk be diversified away by investing in both Bright Scholar and 191216CX6 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 191216CX6 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 COCA COLA CO, you can compare the effects of market volatilities on Bright Scholar and 191216CX6 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 191216CX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and 191216CX6.

Diversification Opportunities for Bright Scholar and 191216CX6

0.44

Correlation Coefficient

Bright Scholar  191216CX6

Very weak diversification

The 3 months correlation between Bright and 191216CX6 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216CX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Bright Scholar i.e., Bright Scholar and 191216CX6 go up and down completely randomly.

Pair Corralation between Bright Scholar and 191216CX6

Given the investment horizon of 90 days Bright Scholar is expected to generate 55.11 times less return on investment than 191216CX6. But when comparing it to its historical volatility, Bright Scholar Education is 8.76 times less risky than 191216CX6. It trades about 0.01 of its potential returns per unit of risk. COCA COLA CO is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,300  in COCA COLA CO on October 23, 2024 and sell it today you would lose (174.00) from holding COCA COLA CO or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.1%
Values	Daily Returns

Bright Scholar Education  vs.  COCA COLA CO

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 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.

COCA A CO

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COCA COLA CO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 191216CX6 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bright Scholar and 191216CX6

The main advantage of trading using opposite Bright Scholar and 191216CX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, 191216CX6 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 191216CX6 will offset losses from the drop in 191216CX6's long position.

The idea behind Bright Scholar Education and COCA COLA CO 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.