Correlation Between Papaya Growth and Bright Scholar

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

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

Diversification Opportunities for Papaya Growth and Bright Scholar

0.08

Correlation Coefficient

Papaya Growth  Bright Scholar

Significant diversification

The 3 months correlation between Papaya and Bright is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Papaya Growth Opportunity 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 Papaya Growth 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 Papaya Growth Opportunity 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 Papaya Growth i.e., Papaya Growth and Bright Scholar go up and down completely randomly.

Pair Corralation between Papaya Growth and Bright Scholar

Assuming the 90 days horizon Papaya Growth is expected to generate 2.17 times less return on investment than Bright Scholar. But when comparing it to its historical volatility, Papaya Growth Opportunity is 6.18 times less risky than Bright Scholar. It trades about 0.05 of its potential returns per unit of risk. Bright Scholar Education is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  195.00  in Bright Scholar Education on September 17, 2024 and sell it today you would earn a total of  1.50  from holding Bright Scholar Education or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Papaya Growth Opportunity  vs.  Bright Scholar Education

Papaya Growth Opportunity

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Papaya Growth Opportunity are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Papaya Growth is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bright Scholar Education

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Scholar Education are ranked lower than 1 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Papaya Growth and Bright Scholar

The main advantage of trading using opposite Papaya Growth and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Papaya Growth 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 Papaya Growth Opportunity 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.