Correlation Between Bright Scholar and 70082LAB3

Can any of the company-specific risk be diversified away by investing in both Bright Scholar and 70082LAB3 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 70082LAB3 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 US70082LAB36, you can compare the effects of market volatilities on Bright Scholar and 70082LAB3 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 70082LAB3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and 70082LAB3.

Diversification Opportunities for Bright Scholar and 70082LAB3

-0.6

Correlation Coefficient

Bright Scholar  70082LAB3

Excellent diversification

The 3 months correlation between Bright and 70082LAB3 is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and US70082LAB36 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US70082LAB36 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 70082LAB3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US70082LAB36 has no effect on the direction of Bright Scholar i.e., Bright Scholar and 70082LAB3 go up and down completely randomly.

Pair Corralation between Bright Scholar and 70082LAB3

Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the 70082LAB3. In addition to that, Bright Scholar is 2.42 times more volatile than US70082LAB36. It trades about -0.05 of its total potential returns per unit of risk. US70082LAB36 is currently generating about 0.07 per unit of volatility. If you would invest  8,576  in US70082LAB36 on September 23, 2024 and sell it today you would earn a total of  284.00  from holding US70082LAB36 or generate 3.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	68.25%
Values	Daily Returns

Bright Scholar Education  vs.  US70082LAB36

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.

US70082LAB36

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US70082LAB36 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 70082LAB3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bright Scholar and 70082LAB3

The main advantage of trading using opposite Bright Scholar and 70082LAB3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, 70082LAB3 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 70082LAB3 will offset losses from the drop in 70082LAB3's long position.

The idea behind Bright Scholar Education and US70082LAB36 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.