Correlation Between Bright Scholar and Sligro Food

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

Diversification Opportunities for Bright Scholar and Sligro Food

0.61

Correlation Coefficient

Bright Scholar  Sligro Food

Poor diversification

The 3 months correlation between Bright and Sligro is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group 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 Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of Bright Scholar i.e., Bright Scholar and Sligro Food go up and down completely randomly.

Pair Corralation between Bright Scholar and Sligro Food

Given the investment horizon of 90 days Bright Scholar Education is expected to generate 1.04 times more return on investment than Sligro Food. However, Bright Scholar is 1.04 times more volatile than Sligro Food Group. It trades about -0.08 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.21 per unit of risk. If you would invest  196.00  in Bright Scholar Education on September 5, 2024 and sell it today you would lose (11.00) from holding Bright Scholar Education or give up 5.61% of portfolio value over 90 days.

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

Bright Scholar Education  vs.  Sligro Food Group

Bright Scholar Education

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Scholar Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Bright Scholar is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bright Scholar and Sligro Food

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

The idea behind Bright Scholar Education and Sligro Food Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.