Correlation Between Shenyang Blue and Blue Sail

Can any of the company-specific risk be diversified away by investing in both Shenyang Blue and Blue Sail 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 Shenyang Blue and Blue Sail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenyang Blue Silver and Blue Sail Medical, you can compare the effects of market volatilities on Shenyang Blue and Blue Sail 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 Shenyang Blue with a short position of Blue Sail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenyang Blue and Blue Sail.

Diversification Opportunities for Shenyang Blue and Blue Sail

0.46

Correlation Coefficient

Shenyang Blue  Blue Sail

Very weak diversification

The 3 months correlation between Shenyang and Blue is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Blue Silver and Blue Sail Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Sail Medical and Shenyang Blue 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 Shenyang Blue Silver are associated (or correlated) with Blue Sail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Sail Medical has no effect on the direction of Shenyang Blue i.e., Shenyang Blue and Blue Sail go up and down completely randomly.

Pair Corralation between Shenyang Blue and Blue Sail

Assuming the 90 days trading horizon Shenyang Blue Silver is expected to under-perform the Blue Sail. In addition to that, Shenyang Blue is 1.56 times more volatile than Blue Sail Medical. It trades about -0.41 of its total potential returns per unit of risk. Blue Sail Medical is currently generating about -0.32 per unit of volatility. If you would invest  576.00  in Blue Sail Medical on October 4, 2024 and sell it today you would lose (63.00) from holding Blue Sail Medical or give up 10.94% of portfolio value over 90 days.

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

Shenyang Blue Silver  vs.  Blue Sail Medical

Shenyang Blue Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenyang Blue Silver 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.

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.

Pair Trading with Shenyang Blue and Blue Sail

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

The idea behind Shenyang Blue Silver and Blue Sail Medical 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.