Correlation Between Blue Sail and Yunnan Chihong

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

Diversification Opportunities for Blue Sail and Yunnan Chihong

0.67

Correlation Coefficient

Blue Sail  Yunnan Chihong

Poor diversification

The 3 months correlation between Blue and Yunnan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Yunnan Chihong ZincGermanium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Chihong ZincG 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 Yunnan Chihong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Chihong ZincG has no effect on the direction of Blue Sail i.e., Blue Sail and Yunnan Chihong go up and down completely randomly.

Pair Corralation between Blue Sail and Yunnan Chihong

Assuming the 90 days trading horizon Blue Sail Medical is expected to under-perform the Yunnan Chihong. But the stock apears to be less risky and, when comparing its historical volatility, Blue Sail Medical is 1.01 times less risky than Yunnan Chihong. The stock trades about -0.04 of its potential returns per unit of risk. The Yunnan Chihong ZincGermanium is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  531.00  in Yunnan Chihong ZincGermanium on October 13, 2024 and sell it today you would earn a total of  15.00  from holding Yunnan Chihong ZincGermanium or generate 2.82% return on investment over 90 days.

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

Blue Sail Medical  vs.  Yunnan Chihong ZincGermanium

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Yunnan Chihong ZincG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yunnan Chihong ZincGermanium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yunnan Chihong 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 Yunnan Chihong

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

The idea behind Blue Sail Medical and Yunnan Chihong ZincGermanium 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.