Correlation Between Old Republic and Bright Scholar

Can any of the company-specific risk be diversified away by investing in both Old Republic and Bright Scholar 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 Old Republic and Bright Scholar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Old Republic International and Bright Scholar Education, you can compare the effects of market volatilities on Old Republic and Bright Scholar 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 Old Republic with a short position of Bright Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Bright Scholar.

Diversification Opportunities for Old Republic and Bright Scholar

-0.51

Correlation Coefficient

Old Republic  Bright Scholar

Excellent diversification

The 3 months correlation between Old and Bright is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Bright Scholar Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Scholar Education and Old Republic 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 Old Republic International are associated (or correlated) with Bright Scholar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Scholar Education has no effect on the direction of Old Republic i.e., Old Republic and Bright Scholar go up and down completely randomly.

Pair Corralation between Old Republic and Bright Scholar

Considering the 90-day investment horizon Old Republic International is expected to generate 0.24 times more return on investment than Bright Scholar. However, Old Republic International is 4.21 times less risky than Bright Scholar. It trades about 0.1 of its potential returns per unit of risk. Bright Scholar Education is currently generating about 0.01 per unit of risk. If you would invest  2,210  in Old Republic International on September 10, 2024 and sell it today you would earn a total of  1,553  from holding Old Republic International or generate 70.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Old Republic International  vs.  Bright Scholar Education

Old Republic Interna

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Old Republic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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

Pair Trading with Old Republic and Bright Scholar

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

The idea behind Old Republic International and Bright Scholar Education 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.