Correlation Between Spineguard and Bluelinea

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

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

Diversification Opportunities for Spineguard and Bluelinea

0.64

Correlation Coefficient

Spineguard  Bluelinea

Poor diversification

The 3 months correlation between Spineguard and Bluelinea is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Spineguard and Bluelinea SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluelinea SA and Spineguard 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 Spineguard 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 Spineguard i.e., Spineguard and Bluelinea go up and down completely randomly.

Pair Corralation between Spineguard and Bluelinea

Assuming the 90 days trading horizon Spineguard is expected to generate 4.6 times more return on investment than Bluelinea. However, Spineguard is 4.6 times more volatile than Bluelinea SA. It trades about 0.12 of its potential returns per unit of risk. Bluelinea SA is currently generating about 0.06 per unit of risk. If you would invest  14.00  in Spineguard on September 12, 2024 and sell it today you would earn a total of  9.00  from holding Spineguard or generate 64.29% return on investment over 90 days.

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

Spineguard  vs.  Bluelinea SA

Spineguard

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spineguard are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Spineguard reported solid returns over the last few months and may actually be approaching a breakup point.

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 Spineguard and Bluelinea

The main advantage of trading using opposite Spineguard and Bluelinea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spineguard 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 Spineguard 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.