Correlation Between Blue Diamond and Critical Solutions

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

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

Diversification Opportunities for Blue Diamond and Critical Solutions

0.0

Correlation Coefficient

Blue Diamond  Critical Solutions

Pay attention - limited upside

The 3 months correlation between Blue and Critical is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Blue Diamond Ventures and Critical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Solutions and Blue Diamond 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 Diamond Ventures are associated (or correlated) with Critical Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Solutions has no effect on the direction of Blue Diamond i.e., Blue Diamond and Critical Solutions go up and down completely randomly.

Pair Corralation between Blue Diamond and Critical Solutions

If you would invest  0.02  in Blue Diamond Ventures on December 28, 2024 and sell it today you would lose (0.01) from holding Blue Diamond Ventures or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Blue Diamond Ventures  vs.  Critical Solutions

Blue Diamond Ventures

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Diamond Ventures are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Blue Diamond showed solid returns over the last few months and may actually be approaching a breakup point.

Critical Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Critical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Critical Solutions is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Blue Diamond and Critical Solutions

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

The idea behind Blue Diamond Ventures and Critical Solutions 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.