Correlation Between Gap, and Bright Scholar
Can any of the company-specific risk be diversified away by investing in both Gap, 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 Gap, and Bright Scholar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap, and Bright Scholar Education, you can compare the effects of market volatilities on Gap, 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 Gap, with a short position of Bright Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and Bright Scholar.
Diversification Opportunities for Gap, and Bright Scholar
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gap, and Bright is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, 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 Gap, 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 The Gap, 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 Gap, i.e., Gap, and Bright Scholar go up and down completely randomly.
Pair Corralation between Gap, and Bright Scholar
Considering the 90-day investment horizon The Gap, is expected to generate 1.36 times more return on investment than Bright Scholar. However, Gap, is 1.36 times more volatile than Bright Scholar Education. It trades about 0.24 of its potential returns per unit of risk. Bright Scholar Education is currently generating about -0.08 per unit of risk. If you would invest 2,161 in The Gap, on September 5, 2024 and sell it today you would earn a total of 418.00 from holding The Gap, or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gap, vs. Bright Scholar Education
Performance |
| Timeline |
| Gap, |
| Bright Scholar Education |
Gap, and Bright Scholar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap, and Bright Scholar
The main advantage of trading using opposite Gap, and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, 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 The Gap, 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.| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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