Correlation Between Bright Scholar and Vasta Platform

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

Diversification Opportunities for Bright Scholar and Vasta Platform

0.12

Correlation Coefficient

Bright Scholar  Vasta Platform

Average diversification

The 3 months correlation between Bright and Vasta is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Vasta Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vasta Platform 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 Vasta Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vasta Platform has no effect on the direction of Bright Scholar i.e., Bright Scholar and Vasta Platform go up and down completely randomly.

Pair Corralation between Bright Scholar and Vasta Platform

Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the Vasta Platform. In addition to that, Bright Scholar is 1.92 times more volatile than Vasta Platform. It trades about -0.01 of its total potential returns per unit of risk. Vasta Platform is currently generating about 0.08 per unit of volatility. If you would invest  230.00  in Vasta Platform on October 21, 2024 and sell it today you would earn a total of  13.00  from holding Vasta Platform or generate 5.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bright Scholar Education  vs.  Vasta Platform

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.

Vasta Platform

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bright Scholar and Vasta Platform

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

The idea behind Bright Scholar Education and Vasta Platform 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.