Correlation Between Blue Coast and Fortis Healthcare

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

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

Diversification Opportunities for Blue Coast and Fortis Healthcare

0.39

Correlation Coefficient

Blue Coast  Fortis Healthcare

Weak diversification

The 3 months correlation between Blue and Fortis is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Blue Coast Hotels and Fortis Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Healthcare and Blue Coast 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 Coast Hotels are associated (or correlated) with Fortis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Healthcare has no effect on the direction of Blue Coast i.e., Blue Coast and Fortis Healthcare go up and down completely randomly.

Pair Corralation between Blue Coast and Fortis Healthcare

Assuming the 90 days trading horizon Blue Coast Hotels is expected to generate 1.17 times more return on investment than Fortis Healthcare. However, Blue Coast is 1.17 times more volatile than Fortis Healthcare Limited. It trades about 0.24 of its potential returns per unit of risk. Fortis Healthcare Limited is currently generating about 0.13 per unit of risk. If you would invest  555.00  in Blue Coast Hotels on October 6, 2024 and sell it today you would earn a total of  1,350  from holding Blue Coast Hotels or generate 243.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.53%
Values	Daily Returns

Blue Coast Hotels  vs.  Fortis Healthcare Limited

Blue Coast Hotels

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Coast Hotels are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Blue Coast sustained solid returns over the last few months and may actually be approaching a breakup point.

Fortis Healthcare

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Healthcare Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Fortis Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Coast and Fortis Healthcare

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

The idea behind Blue Coast Hotels and Fortis Healthcare Limited 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.