Correlation Between Elite Education and Bright Scholar
Can any of the company-specific risk be diversified away by investing in both Elite Education 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 Elite Education and Bright Scholar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Education Group and Bright Scholar Education, you can compare the effects of market volatilities on Elite Education 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 Elite Education with a short position of Bright Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Education and Bright Scholar.
Diversification Opportunities for Elite Education and Bright Scholar
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elite and Bright is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group 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 Elite Education 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 Elite Education Group 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 Elite Education i.e., Elite Education and Bright Scholar go up and down completely randomly.
Pair Corralation between Elite Education and Bright Scholar
Given the investment horizon of 90 days Elite Education Group is expected to under-perform the Bright Scholar. But the stock apears to be less risky and, when comparing its historical volatility, Elite Education Group is 2.78 times less risky than Bright Scholar. The stock trades about -0.04 of its potential returns per unit of risk. The Bright Scholar Education is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 169.00 in Bright Scholar Education on November 7, 2024 and sell it today you would earn a total of 8.00 from holding Bright Scholar Education or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Education Group vs. Bright Scholar Education
Performance |
| Timeline |
| Elite Education Group |
| Bright Scholar Education |
Elite Education and Bright Scholar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Education and Bright Scholar
The main advantage of trading using opposite Elite Education and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Education 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.| Elite Education vs. Laureate Education | Elite Education vs. American Public Education | Elite Education vs. Lincoln Educational Services | Elite Education vs. Adtalem Global Education |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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