Correlation Between Action Construction and Blue Jet

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

By analyzing existing cross correlation between Action Construction Equipment and Blue Jet Healthcare, you can compare the effects of market volatilities on Action Construction and Blue Jet 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 Action Construction with a short position of Blue Jet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Action Construction and Blue Jet.

Diversification Opportunities for Action Construction and Blue Jet

0.18

Correlation Coefficient

Action Construction  Blue Jet

Average diversification

The 3 months correlation between Action and Blue is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Action Construction Equipment and Blue Jet Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Jet Healthcare and Action Construction 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 Action Construction Equipment are associated (or correlated) with Blue Jet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Jet Healthcare has no effect on the direction of Action Construction i.e., Action Construction and Blue Jet go up and down completely randomly.

Pair Corralation between Action Construction and Blue Jet

Assuming the 90 days trading horizon Action Construction is expected to generate 3.33 times less return on investment than Blue Jet. In addition to that, Action Construction is 1.08 times more volatile than Blue Jet Healthcare. It trades about 0.02 of its total potential returns per unit of risk. Blue Jet Healthcare is currently generating about 0.07 per unit of volatility. If you would invest  47,469  in Blue Jet Healthcare on September 3, 2024 and sell it today you would earn a total of  4,471  from holding Blue Jet Healthcare or generate 9.42% return on investment over 90 days.

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

Action Construction Equipment  vs.  Blue Jet Healthcare

Action Construction

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Action Construction Equipment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Action Construction is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Blue Jet Healthcare

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Jet Healthcare are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, Blue Jet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Action Construction and Blue Jet

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

The idea behind Action Construction Equipment and Blue Jet Healthcare 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.