Correlation Between Blacksky Technology and China New

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

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

Diversification Opportunities for Blacksky Technology and China New

-0.38

Correlation Coefficient

Blacksky Technology  China New

Very good diversification

The 3 months correlation between Blacksky and China is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Blacksky Technology and China New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China New Energy and Blacksky Technology 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 Blacksky Technology are associated (or correlated) with China New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China New Energy has no effect on the direction of Blacksky Technology i.e., Blacksky Technology and China New go up and down completely randomly.

Pair Corralation between Blacksky Technology and China New

Given the investment horizon of 90 days Blacksky Technology is expected to under-perform the China New. But the stock apears to be less risky and, when comparing its historical volatility, Blacksky Technology is 4.82 times less risky than China New. The stock trades about -0.04 of its potential returns per unit of risk. The China New Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.40  in China New Energy on October 12, 2024 and sell it today you would earn a total of  0.00  from holding China New Energy or generate 0.0% return on investment over 90 days.

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

Blacksky Technology  vs.  China New Energy

Blacksky Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blacksky Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Blacksky Technology showed solid returns over the last few months and may actually be approaching a breakup point.

China New Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China New Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, China New reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blacksky Technology and China New

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

The idea behind Blacksky Technology and China New Energy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.