Correlation Between Blue Sail and Xinhua Winshare

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

Diversification Opportunities for Blue Sail and Xinhua Winshare

0.25

Correlation Coefficient

Blue Sail  Xinhua Winshare

Modest diversification

The 3 months correlation between Blue and Xinhua is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Xinhua Winshare Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinhua Winshare Publ 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 Xinhua Winshare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinhua Winshare Publ has no effect on the direction of Blue Sail i.e., Blue Sail and Xinhua Winshare go up and down completely randomly.

Pair Corralation between Blue Sail and Xinhua Winshare

Assuming the 90 days trading horizon Blue Sail Medical is expected to generate 1.03 times more return on investment than Xinhua Winshare. However, Blue Sail is 1.03 times more volatile than Xinhua Winshare Publishing. It trades about 0.2 of its potential returns per unit of risk. Xinhua Winshare Publishing is currently generating about 0.05 per unit of risk. If you would invest  444.00  in Blue Sail Medical on September 13, 2024 and sell it today you would earn a total of  146.00  from holding Blue Sail Medical or generate 32.88% return on investment over 90 days.

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

Blue Sail Medical  vs.  Xinhua Winshare Publishing

Blue Sail Medical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Sail Medical are ranked lower than 15 (%) 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.

Xinhua Winshare Publ

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xinhua Winshare Publishing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinhua Winshare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blue Sail and Xinhua Winshare

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

The idea behind Blue Sail Medical and Xinhua Winshare Publishing 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.