Correlation Between Bright Scholar and Four Seasons
Can any of the company-specific risk be diversified away by investing in both Bright Scholar and Four Seasons 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 Four Seasons 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 Four Seasons Education, you can compare the effects of market volatilities on Bright Scholar and Four Seasons 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 Four Seasons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Four Seasons.
Diversification Opportunities for Bright Scholar and Four Seasons
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bright and Four is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons 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 Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of Bright Scholar i.e., Bright Scholar and Four Seasons go up and down completely randomly.
Pair Corralation between Bright Scholar and Four Seasons
Given the investment horizon of 90 days Bright Scholar is expected to generate 53.26 times less return on investment than Four Seasons. But when comparing it to its historical volatility, Bright Scholar Education is 10.01 times less risky than Four Seasons. It trades about 0.01 of its potential returns per unit of risk. Four Seasons Education is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 663.00 in Four Seasons Education on August 31, 2024 and sell it today you would earn a total of 389.00 from holding Four Seasons Education or generate 58.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.91% |
| Values | Daily Returns |
Bright Scholar Education vs. Four Seasons Education
Performance |
| Timeline |
| Bright Scholar Education |
| Four Seasons Education |
Bright Scholar and Four Seasons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Four Seasons
The main advantage of trading using opposite Bright Scholar and Four Seasons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, Four Seasons 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 Four Seasons will offset losses from the drop in Four Seasons' long position.| Bright Scholar vs. Lincoln Educational Services | Bright Scholar vs. Aquagold International | Bright Scholar vs. Thrivent High Yield | Bright Scholar vs. Morningstar Unconstrained Allocation |
| Four Seasons vs. Wah Fu Education | Four Seasons vs. Sunlands Technology Group | Four Seasons vs. 51Talk Online Education | Four Seasons vs. China Liberal Education |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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