Correlation Between Bright Scholar and Sea
Can any of the company-specific risk be diversified away by investing in both Bright Scholar and Sea 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 Sea 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 Sea, you can compare the effects of market volatilities on Bright Scholar and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Sea.
Diversification Opportunities for Bright Scholar and Sea
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bright and Sea is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Bright Scholar i.e., Bright Scholar and Sea go up and down completely randomly.
Pair Corralation between Bright Scholar and Sea
Given the investment horizon of 90 days Bright Scholar is expected to generate 19.65 times less return on investment than Sea. But when comparing it to its historical volatility, Bright Scholar Education is 1.12 times less risky than Sea. It trades about 0.01 of its potential returns per unit of risk. Sea is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 9,746 in Sea on September 12, 2024 and sell it today you would earn a total of 1,459 from holding Sea or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bright Scholar Education vs. Sea
Performance |
| Timeline |
| Bright Scholar Education |
| Sea |
Bright Scholar and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Sea
The main advantage of trading using opposite Bright Scholar and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Bright Scholar vs. Laureate Education | Bright Scholar vs. China Liberal Education | Bright Scholar vs. Adtalem Global Education | Bright Scholar vs. Grand Canyon 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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