Correlation Between Bright Scholar and Vitru

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

Diversification Opportunities for Bright Scholar and Vitru

0.0

Correlation Coefficient

Bright Scholar  Vitru

Pay attention - limited upside

The 3 months correlation between Bright and Vitru is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Vitru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitru 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 Vitru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitru has no effect on the direction of Bright Scholar i.e., Bright Scholar and Vitru go up and down completely randomly.

Pair Corralation between Bright Scholar and Vitru

If you would invest (100.00) in Vitru on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Vitru or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bright Scholar Education  vs.  Vitru

Bright Scholar Education

Risk-Adjusted Performance

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

Vitru

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vitru has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vitru is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bright Scholar and Vitru

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

The idea behind Bright Scholar Education and Vitru 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.