Correlation Between Peoples Educational and Bright Scholar

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

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

Diversification Opportunities for Peoples Educational and Bright Scholar

0.27

Correlation Coefficient

Peoples Educational  Bright Scholar

Modest diversification

The 3 months correlation between Peoples and Bright is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Educational Holdings 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 Peoples Educational 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 Peoples Educational Holdings 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 Peoples Educational i.e., Peoples Educational and Bright Scholar go up and down completely randomly.

Pair Corralation between Peoples Educational and Bright Scholar

Given the investment horizon of 90 days Peoples Educational Holdings is expected to under-perform the Bright Scholar. In addition to that, Peoples Educational is 1.02 times more volatile than Bright Scholar Education. It trades about -0.13 of its total potential returns per unit of risk. Bright Scholar Education is currently generating about 0.0 per unit of volatility. If you would invest  175.00  in Bright Scholar Education on November 28, 2024 and sell it today you would lose (18.00) from holding Bright Scholar Education or give up 10.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Peoples Educational Holdings  vs.  Bright Scholar Education

Peoples Educational

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peoples Educational Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Bright Scholar Education

Risk-Adjusted Performance

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 Peoples Educational and Bright Scholar

The main advantage of trading using opposite Peoples Educational and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Educational 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 Peoples Educational Holdings 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.