Correlation Between Blue Line and Supercom

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

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

Diversification Opportunities for Blue Line and Supercom

0.23

Correlation Coefficient

Blue Line  Supercom

Modest diversification

The 3 months correlation between Blue and Supercom is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Blue Line Protection and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom and Blue Line 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 Line Protection are associated (or correlated) with Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of Blue Line i.e., Blue Line and Supercom go up and down completely randomly.

Pair Corralation between Blue Line and Supercom

Given the investment horizon of 90 days Blue Line is expected to generate 1.05 times less return on investment than Supercom. But when comparing it to its historical volatility, Blue Line Protection is 1.09 times less risky than Supercom. It trades about 0.08 of its potential returns per unit of risk. Supercom is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  595.00  in Supercom on December 29, 2024 and sell it today you would earn a total of  135.00  from holding Supercom or generate 22.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Blue Line Protection  vs.  Supercom

Blue Line Protection

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Line Protection are ranked lower than 6 (%) 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.

Supercom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Supercom are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Supercom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Line and Supercom

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

The idea behind Blue Line Protection and Supercom 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.