Correlation Between Bright Scholar and SOUTHERN

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

Diversification Opportunities for Bright Scholar and SOUTHERN

0.48

Correlation Coefficient

Bright Scholar  SOUTHERN

Very weak diversification

The 3 months correlation between Bright and SOUTHERN is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and SOUTHERN PER CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN PER P 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN PER P has no effect on the direction of Bright Scholar i.e., Bright Scholar and SOUTHERN go up and down completely randomly.

Pair Corralation between Bright Scholar and SOUTHERN

Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the SOUTHERN. In addition to that, Bright Scholar is 5.61 times more volatile than SOUTHERN PER CORP. It trades about -0.04 of its total potential returns per unit of risk. SOUTHERN PER CORP is currently generating about 0.0 per unit of volatility. If you would invest  11,583  in SOUTHERN PER CORP on October 6, 2024 and sell it today you would lose (12.00) from holding SOUTHERN PER CORP or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.0%
Values	Daily Returns

Bright Scholar Education  vs.  SOUTHERN PER CORP

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 latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bright Scholar and SOUTHERN

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

The idea behind Bright Scholar Education and SOUTHERN PER CORP 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.