Correlation Between Blue Sail and Changjiang Jinggong

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

Diversification Opportunities for Blue Sail and Changjiang Jinggong

0.95

Correlation Coefficient

Blue Sail  Changjiang Jinggong

Almost no diversification

The 3 months correlation between Blue and Changjiang is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Changjiang Jinggong Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changjiang Jinggong Steel 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 Changjiang Jinggong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changjiang Jinggong Steel has no effect on the direction of Blue Sail i.e., Blue Sail and Changjiang Jinggong go up and down completely randomly.

Pair Corralation between Blue Sail and Changjiang Jinggong

Assuming the 90 days trading horizon Blue Sail Medical is expected to under-perform the Changjiang Jinggong. In addition to that, Blue Sail is 1.14 times more volatile than Changjiang Jinggong Steel. It trades about -0.04 of its total potential returns per unit of risk. Changjiang Jinggong Steel is currently generating about 0.04 per unit of volatility. If you would invest  307.00  in Changjiang Jinggong Steel on September 22, 2024 and sell it today you would earn a total of  3.00  from holding Changjiang Jinggong Steel or generate 0.98% return on investment over 90 days.

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

Blue Sail Medical  vs.  Changjiang Jinggong Steel

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.

Changjiang Jinggong Steel

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Blue Sail and Changjiang Jinggong

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

The idea behind Blue Sail Medical and Changjiang Jinggong Steel 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.