Correlation Between Blue Sail and Qinghai Salt

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

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

Diversification Opportunities for Blue Sail and Qinghai Salt

0.37

Correlation Coefficient

Blue Sail  Qinghai Salt

Weak diversification

The 3 months correlation between Blue and Qinghai is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Qinghai Salt Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qinghai Salt Lake and Blue Sail 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 Blue Sail Medical are associated (or correlated) with Qinghai Salt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qinghai Salt Lake has no effect on the direction of Blue Sail i.e., Blue Sail and Qinghai Salt go up and down completely randomly.

Pair Corralation between Blue Sail and Qinghai Salt

Assuming the 90 days trading horizon Blue Sail Medical is expected to under-perform the Qinghai Salt. In addition to that, Blue Sail is 1.09 times more volatile than Qinghai Salt Lake. It trades about -0.04 of its total potential returns per unit of risk. Qinghai Salt Lake is currently generating about -0.04 per unit of volatility. If you would invest  2,487  in Qinghai Salt Lake on October 12, 2024 and sell it today you would lose (862.00) from holding Qinghai Salt Lake or give up 34.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Blue Sail Medical  vs.  Qinghai Salt Lake

Blue Sail Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Sail Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Blue Sail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qinghai Salt Lake

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qinghai Salt Lake has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Qinghai Salt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blue Sail and Qinghai Salt

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

The idea behind Blue Sail Medical and Qinghai Salt Lake 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.