Correlation Between Implanet and Bluelinea

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

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

Diversification Opportunities for Implanet and Bluelinea

0.43

Correlation Coefficient

Implanet  Bluelinea

Very weak diversification

The 3 months correlation between Implanet and Bluelinea is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Implanet SA and Bluelinea SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluelinea SA and Implanet 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 Implanet SA are associated (or correlated) with Bluelinea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluelinea SA has no effect on the direction of Implanet i.e., Implanet and Bluelinea go up and down completely randomly.

Pair Corralation between Implanet and Bluelinea

Assuming the 90 days trading horizon Implanet SA is expected to generate 2.59 times more return on investment than Bluelinea. However, Implanet is 2.59 times more volatile than Bluelinea SA. It trades about 0.02 of its potential returns per unit of risk. Bluelinea SA is currently generating about 0.06 per unit of risk. If you would invest  11.00  in Implanet SA on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Implanet SA or generate 0.0% return on investment over 90 days.

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

Implanet SA  vs.  Bluelinea SA

Implanet SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Implanet SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Implanet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bluelinea SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bluelinea SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bluelinea may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Implanet and Bluelinea

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

The idea behind Implanet SA and Bluelinea SA 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.