Correlation Between Blue Star and 79North

Can any of the company-specific risk be diversified away by investing in both Blue Star and 79North 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 Blue Star and 79North into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Star Gold and 79North, you can compare the effects of market volatilities on Blue Star and 79North 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 Blue Star with a short position of 79North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and 79North.

Diversification Opportunities for Blue Star and 79North

-0.41

Correlation Coefficient

Blue Star  79North

Very good diversification

The 3 months correlation between Blue and 79North is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Gold and 79North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 79North and Blue Star 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 Blue Star Gold are associated (or correlated) with 79North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 79North has no effect on the direction of Blue Star i.e., Blue Star and 79North go up and down completely randomly.

Pair Corralation between Blue Star and 79North

Assuming the 90 days horizon Blue Star Gold is expected to under-perform the 79North. In addition to that, Blue Star is 1.56 times more volatile than 79North. It trades about -0.18 of its total potential returns per unit of risk. 79North is currently generating about -0.11 per unit of volatility. If you would invest  3.33  in 79North on September 11, 2024 and sell it today you would lose (0.47) from holding 79North or give up 14.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	43.08%
Values	Daily Returns

Blue Star Gold  vs.  79North

Blue Star Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Star Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

79North

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 79North 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 nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Blue Star and 79North

The main advantage of trading using opposite Blue Star and 79North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Star position performs unexpectedly, 79North 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 79North will offset losses from the drop in 79North's long position.

The idea behind Blue Star Gold and 79North 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.