Correlation Between Maoming Petro and Blue Sail

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

By analyzing existing cross correlation between Maoming Petro Chemical Shihua and Blue Sail Medical, you can compare the effects of market volatilities on Maoming Petro and Blue Sail 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 Maoming Petro with a short position of Blue Sail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maoming Petro and Blue Sail.

Diversification Opportunities for Maoming Petro and Blue Sail

0.92

Correlation Coefficient

Maoming Petro  Blue Sail

Almost no diversification

The 3 months correlation between Maoming and Blue is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Maoming Petro Chemical Shihua and Blue Sail Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Sail Medical and Maoming Petro 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 Maoming Petro Chemical Shihua are associated (or correlated) with Blue Sail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Sail Medical has no effect on the direction of Maoming Petro i.e., Maoming Petro and Blue Sail go up and down completely randomly.

Pair Corralation between Maoming Petro and Blue Sail

Assuming the 90 days trading horizon Maoming Petro Chemical Shihua is expected to generate 1.03 times more return on investment than Blue Sail. However, Maoming Petro is 1.03 times more volatile than Blue Sail Medical. It trades about 0.23 of its potential returns per unit of risk. Blue Sail Medical is currently generating about 0.18 per unit of risk. If you would invest  307.00  in Maoming Petro Chemical Shihua on September 12, 2024 and sell it today you would earn a total of  121.00  from holding Maoming Petro Chemical Shihua or generate 39.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Maoming Petro Chemical Shihua  vs.  Blue Sail Medical

Maoming Petro Chemical

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Maoming Petro Chemical Shihua are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maoming Petro sustained solid returns over the last few months and may actually be approaching a breakup point.

Blue Sail Medical

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Sail Medical are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Blue Sail sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maoming Petro and Blue Sail

The main advantage of trading using opposite Maoming Petro and Blue Sail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maoming Petro position performs unexpectedly, Blue Sail 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 Blue Sail will offset losses from the drop in Blue Sail's long position.

The idea behind Maoming Petro Chemical Shihua and Blue Sail Medical 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.