Correlation Between Bright Scholar and NBCUNIVERSAL

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

Diversification Opportunities for Bright Scholar and NBCUNIVERSAL

0.23

Correlation Coefficient

Bright Scholar  NBCUNIVERSAL

Modest diversification

The 3 months correlation between Bright and NBCUNIVERSAL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of Bright Scholar i.e., Bright Scholar and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between Bright Scholar and NBCUNIVERSAL

Given the investment horizon of 90 days Bright Scholar Education is expected to generate 2.86 times more return on investment than NBCUNIVERSAL. However, Bright Scholar is 2.86 times more volatile than NBCUNIVERSAL MEDIA LLC. It trades about 0.03 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about -0.13 per unit of risk. If you would invest  174.00  in Bright Scholar Education on December 25, 2024 and sell it today you would earn a total of  3.00  from holding Bright Scholar Education or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	45.76%
Values	Daily Returns

Bright Scholar Education  vs.  NBCUNIVERSAL MEDIA LLC

Bright Scholar Education

Risk-Adjusted Performance

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 weak fundamental indicators, Bright Scholar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for NBCUNIVERSAL MEDIA LLC investors.

Pair Trading with Bright Scholar and NBCUNIVERSAL

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

The idea behind Bright Scholar Education and NBCUNIVERSAL MEDIA LLC 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.