Correlation Between Blue Sail and Hainan HNA

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

Diversification Opportunities for Blue Sail and Hainan HNA

0.87

Correlation Coefficient

Blue Sail  Hainan HNA

Very poor diversification

The 3 months correlation between Blue and Hainan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Hainan HNA Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan HNA Infrastructure 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 Hainan HNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan HNA Infrastructure has no effect on the direction of Blue Sail i.e., Blue Sail and Hainan HNA go up and down completely randomly.

Pair Corralation between Blue Sail and Hainan HNA

Assuming the 90 days trading horizon Blue Sail Medical is expected to under-perform the Hainan HNA. But the stock apears to be less risky and, when comparing its historical volatility, Blue Sail Medical is 1.53 times less risky than Hainan HNA. The stock trades about -0.04 of its potential returns per unit of risk. The Hainan HNA Infrastructure is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  384.00  in Hainan HNA Infrastructure on September 22, 2024 and sell it today you would earn a total of  7.00  from holding Hainan HNA Infrastructure or generate 1.82% return on investment over 90 days.

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

Blue Sail Medical  vs.  Hainan HNA Infrastructure

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.

Hainan HNA Infrastructure

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Blue Sail and Hainan HNA

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

The idea behind Blue Sail Medical and Hainan HNA Infrastructure 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 Global Correlations module to find global opportunities by holding instruments from different markets.