Correlation Between Bright Scholar and Visionary Education

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

Diversification Opportunities for Bright Scholar and Visionary Education

0.3

Correlation Coefficient

Bright Scholar  Visionary Education

Weak diversification

The 3 months correlation between Bright and Visionary is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Visionary Education Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visionary Education 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 Visionary Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visionary Education has no effect on the direction of Bright Scholar i.e., Bright Scholar and Visionary Education go up and down completely randomly.

Pair Corralation between Bright Scholar and Visionary Education

Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the Visionary Education. But the stock apears to be less risky and, when comparing its historical volatility, Bright Scholar Education is 2.3 times less risky than Visionary Education. The stock trades about -0.03 of its potential returns per unit of risk. The Visionary Education Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  240.00  in Visionary Education Technology on September 30, 2024 and sell it today you would lose (54.00) from holding Visionary Education Technology or give up 22.5% of portfolio value over 90 days.

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

Bright Scholar Education  vs.  Visionary Education Technology

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 uncertain 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.

Visionary Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visionary Education Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visionary Education is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bright Scholar and Visionary Education

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

The idea behind Bright Scholar Education and Visionary Education Technology 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.