Correlation Between Bright Scholar and Gaotu Techedu
Can any of the company-specific risk be diversified away by investing in both Bright Scholar and Gaotu Techedu 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 Gaotu Techedu 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 Gaotu Techedu DRC, you can compare the effects of market volatilities on Bright Scholar and Gaotu Techedu 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 Gaotu Techedu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Gaotu Techedu.
Diversification Opportunities for Bright Scholar and Gaotu Techedu
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bright and Gaotu is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Gaotu Techedu DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaotu Techedu DRC 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 Gaotu Techedu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaotu Techedu DRC has no effect on the direction of Bright Scholar i.e., Bright Scholar and Gaotu Techedu go up and down completely randomly.
Pair Corralation between Bright Scholar and Gaotu Techedu
Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the Gaotu Techedu. But the stock apears to be less risky and, when comparing its historical volatility, Bright Scholar Education is 1.79 times less risky than Gaotu Techedu. The stock trades about -0.01 of its potential returns per unit of risk. The Gaotu Techedu DRC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 270.00 in Gaotu Techedu DRC on August 28, 2024 and sell it today you would lose (15.00) from holding Gaotu Techedu DRC or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bright Scholar Education vs. Gaotu Techedu DRC
Performance |
| Timeline |
| Bright Scholar Education |
| Gaotu Techedu DRC |
Bright Scholar and Gaotu Techedu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Gaotu Techedu
The main advantage of trading using opposite Bright Scholar and Gaotu Techedu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, Gaotu Techedu 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 Gaotu Techedu will offset losses from the drop in Gaotu Techedu's long position.| Bright Scholar vs. American Public Education | Bright Scholar vs. Lincoln Educational Services | Bright Scholar vs. Adtalem Global Education |
| Gaotu Techedu vs. TAL Education Group | Gaotu Techedu vs. 17 Education Technology | Gaotu Techedu vs. New Oriental Education | Gaotu Techedu vs. RLX Technology |
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.
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