Correlation Between CompoSecure and Bright Scholar

Can any of the company-specific risk be diversified away by investing in both CompoSecure 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 CompoSecure and Bright Scholar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CompoSecure and Bright Scholar Education, you can compare the effects of market volatilities on CompoSecure 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 CompoSecure with a short position of Bright Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompoSecure and Bright Scholar.

Diversification Opportunities for CompoSecure and Bright Scholar

0.31

Correlation Coefficient

CompoSecure  Bright Scholar

Weak diversification

The 3 months correlation between CompoSecure and Bright is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure 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 CompoSecure 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 CompoSecure 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 CompoSecure i.e., CompoSecure and Bright Scholar go up and down completely randomly.

Pair Corralation between CompoSecure and Bright Scholar

Assuming the 90 days horizon CompoSecure is expected to generate 2.11 times more return on investment than Bright Scholar. However, CompoSecure is 2.11 times more volatile than Bright Scholar Education. It trades about 0.21 of its potential returns per unit of risk. Bright Scholar Education is currently generating about 0.0 per unit of risk. If you would invest  510.00  in CompoSecure on May 15, 2025 and sell it today you would earn a total of  570.00  from holding CompoSecure or generate 111.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

CompoSecure  vs.  Bright Scholar Education

CompoSecure

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CompoSecure showed solid returns over the last few months and may actually be approaching a breakup point.

Bright Scholar Education

Risk-Adjusted Performance

Weakest

Over the last 90 days Bright Scholar Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Bright Scholar is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CompoSecure and Bright Scholar

The main advantage of trading using opposite CompoSecure and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompoSecure 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 CompoSecure 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.