Correlation Between Blue Sail and Xizi Clean

Can any of the company-specific risk be diversified away by investing in both Blue Sail and Xizi Clean 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 Xizi Clean 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 Xizi Clean Energy, you can compare the effects of market volatilities on Blue Sail and Xizi Clean 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 Xizi Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Sail and Xizi Clean.

Diversification Opportunities for Blue Sail and Xizi Clean

0.86

Correlation Coefficient

Blue Sail  Xizi Clean

Very poor diversification

The 3 months correlation between Blue and Xizi is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Xizi Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xizi Clean Energy 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 Xizi Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xizi Clean Energy has no effect on the direction of Blue Sail i.e., Blue Sail and Xizi Clean go up and down completely randomly.

Pair Corralation between Blue Sail and Xizi Clean

Assuming the 90 days trading horizon Blue Sail Medical is expected to generate 1.15 times more return on investment than Xizi Clean. However, Blue Sail is 1.15 times more volatile than Xizi Clean Energy. It trades about -0.04 of its potential returns per unit of risk. Xizi Clean Energy is currently generating about -0.2 per unit of risk. If you would invest  562.00  in Blue Sail Medical on September 22, 2024 and sell it today you would lose (11.00) from holding Blue Sail Medical or give up 1.96% of portfolio value over 90 days.

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

Blue Sail Medical  vs.  Xizi Clean Energy

Blue Sail Medical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Sail Medical are ranked lower than 12 (%) 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.

Xizi Clean Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xizi Clean Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xizi Clean sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Sail and Xizi Clean

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

The idea behind Blue Sail Medical and Xizi Clean Energy 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.