Correlation Between PS International and Bright Scholar

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

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

Diversification Opportunities for PS International and Bright Scholar

0.2

Correlation Coefficient

PS International  Bright Scholar

Modest diversification

The 3 months correlation between PSIG and Bright is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PS International Group 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 PS International 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 PS International Group 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 PS International i.e., PS International and Bright Scholar go up and down completely randomly.

Pair Corralation between PS International and Bright Scholar

Given the investment horizon of 90 days PS International Group is expected to under-perform the Bright Scholar. In addition to that, PS International is 1.72 times more volatile than Bright Scholar Education. It trades about -0.3 of its total potential returns per unit of risk. Bright Scholar Education is currently generating about -0.19 per unit of volatility. If you would invest  194.00  in Bright Scholar Education on September 2, 2024 and sell it today you would lose (19.00) from holding Bright Scholar Education or give up 9.79% of portfolio value over 90 days.

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

PS International Group  vs.  Bright Scholar Education

PS International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PS International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 inconsistent 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.

Pair Trading with PS International and Bright Scholar

The main advantage of trading using opposite PS International and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PS International 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 PS International Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.