Correlation Between Blue Sail and GRIPM Advanced

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

Diversification Opportunities for Blue Sail and GRIPM Advanced

0.87

Correlation Coefficient

Blue Sail  GRIPM Advanced

Very poor diversification

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

Pair Corralation between Blue Sail and GRIPM Advanced

Assuming the 90 days trading horizon Blue Sail Medical is expected to under-perform the GRIPM Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Blue Sail Medical is 1.51 times less risky than GRIPM Advanced. The stock trades about -0.04 of its potential returns per unit of risk. The GRIPM Advanced Materials is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,340  in GRIPM Advanced Materials on September 22, 2024 and sell it today you would earn a total of  206.00  from holding GRIPM Advanced Materials or generate 6.17% 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.  GRIPM Advanced Materials

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.

GRIPM Advanced Materials

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GRIPM Advanced Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GRIPM Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Sail and GRIPM Advanced

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

The idea behind Blue Sail Medical and GRIPM Advanced Materials 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.