Correlation Between 17 Education and Bright Scholar

Can any of the company-specific risk be diversified away by investing in both 17 Education 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 17 Education and Bright Scholar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 17 Education Technology and Bright Scholar Education, you can compare the effects of market volatilities on 17 Education 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 17 Education with a short position of Bright Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of 17 Education and Bright Scholar.

Diversification Opportunities for 17 Education and Bright Scholar

0.44

Correlation Coefficient

17 Education  Bright Scholar

Very weak diversification

The 3 months correlation between 17 Education and Bright is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding 17 Education Technology 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 17 Education 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 17 Education Technology 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 17 Education i.e., 17 Education and Bright Scholar go up and down completely randomly.

Pair Corralation between 17 Education and Bright Scholar

Allowing for the 90-day total investment horizon 17 Education Technology is expected to generate 1.49 times more return on investment than Bright Scholar. However, 17 Education is 1.49 times more volatile than Bright Scholar Education. It trades about -0.01 of its potential returns per unit of risk. Bright Scholar Education is currently generating about -0.03 per unit of risk. If you would invest  210.00  in 17 Education Technology on September 4, 2024 and sell it today you would lose (23.00) from holding 17 Education Technology or give up 10.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

17 Education Technology  vs.  Bright Scholar Education

17 Education Technology

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days 17 Education Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, 17 Education is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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 17 Education and Bright Scholar

The main advantage of trading using opposite 17 Education and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 17 Education 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 17 Education Technology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.