Correlation Between Bright Scholar and AMREP

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

Diversification Opportunities for Bright Scholar and AMREP

-0.44

Correlation Coefficient

Bright Scholar  AMREP

Very good diversification

The 3 months correlation between Bright and AMREP is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP 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 AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Bright Scholar i.e., Bright Scholar and AMREP go up and down completely randomly.

Pair Corralation between Bright Scholar and AMREP

Given the investment horizon of 90 days Bright Scholar is expected to generate 3.52 times less return on investment than AMREP. But when comparing it to its historical volatility, Bright Scholar Education is 1.22 times less risky than AMREP. It trades about 0.04 of its potential returns per unit of risk. AMREP is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,609  in AMREP on September 18, 2024 and sell it today you would earn a total of  718.00  from holding AMREP or generate 27.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Bright Scholar Education  vs.  AMREP

Bright Scholar Education

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Scholar Education are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Bright Scholar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AMREP

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AMREP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bright Scholar and AMREP

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

The idea behind Bright Scholar Education and AMREP 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.