Correlation Between BIO Key and Blue Line

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

By analyzing existing cross correlation between BIO Key International and Blue Line Protection, you can compare the effects of market volatilities on BIO Key and Blue Line 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 BIO Key with a short position of Blue Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIO Key and Blue Line.

Diversification Opportunities for BIO Key and Blue Line

-0.5

Correlation Coefficient

BIO Key  Blue Line

Very good diversification

The 3 months correlation between BIO and Blue is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BIO Key International and Blue Line Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Line Protection and BIO Key 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 BIO Key International are associated (or correlated) with Blue Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Line Protection has no effect on the direction of BIO Key i.e., BIO Key and Blue Line go up and down completely randomly.

Pair Corralation between BIO Key and Blue Line

Given the investment horizon of 90 days BIO Key International is expected to generate 1.65 times more return on investment than Blue Line. However, BIO Key is 1.65 times more volatile than Blue Line Protection. It trades about 0.15 of its potential returns per unit of risk. Blue Line Protection is currently generating about 0.14 per unit of risk. If you would invest  107.00  in BIO Key International on October 12, 2024 and sell it today you would earn a total of  37.00  from holding BIO Key International or generate 34.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

BIO Key International  vs.  Blue Line Protection

BIO Key International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BIO Key International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, BIO Key demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Blue Line Protection

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Line Protection are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Blue Line reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIO Key and Blue Line

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

The idea behind BIO Key International and Blue Line Protection 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 Stocks Directory module to find actively traded stocks across global markets.