Correlation Between Hubei Geoway and Blue Sail

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

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

Diversification Opportunities for Hubei Geoway and Blue Sail

0.48

Correlation Coefficient

Hubei Geoway  Blue Sail

Very weak diversification

The 3 months correlation between Hubei and Blue is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Geoway Investment 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 Hubei Geoway 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 Hubei Geoway Investment 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 Hubei Geoway i.e., Hubei Geoway and Blue Sail go up and down completely randomly.

Pair Corralation between Hubei Geoway and Blue Sail

Assuming the 90 days trading horizon Hubei Geoway Investment is expected to generate 1.47 times more return on investment than Blue Sail. However, Hubei Geoway is 1.47 times more volatile than Blue Sail Medical. It trades about -0.01 of its potential returns per unit of risk. Blue Sail Medical is currently generating about -0.04 per unit of risk. If you would invest  206.00  in Hubei Geoway Investment on October 25, 2024 and sell it today you would lose (59.00) from holding Hubei Geoway Investment or give up 28.64% of portfolio value over 90 days.

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

Hubei Geoway Investment  vs.  Blue Sail Medical

Hubei Geoway Investment

Risk-Adjusted Performance

3 of 100

Insignificant

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

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hubei Geoway and Blue Sail

The main advantage of trading using opposite Hubei Geoway and Blue Sail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Geoway 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 Hubei Geoway Investment 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.