Correlation Between Blue Jet and Fertilizers

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

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

Diversification Opportunities for Blue Jet and Fertilizers

0.29

Correlation Coefficient

Blue Jet  Fertilizers

Modest diversification

The 3 months correlation between Blue and Fertilizers is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Blue Jet Healthcare and Fertilizers and Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizers and Chemicals and Blue Jet 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 Jet Healthcare are associated (or correlated) with Fertilizers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizers and Chemicals has no effect on the direction of Blue Jet i.e., Blue Jet and Fertilizers go up and down completely randomly.

Pair Corralation between Blue Jet and Fertilizers

Assuming the 90 days trading horizon Blue Jet Healthcare is expected to generate 0.8 times more return on investment than Fertilizers. However, Blue Jet Healthcare is 1.25 times less risky than Fertilizers. It trades about 0.07 of its potential returns per unit of risk. Fertilizers and Chemicals is currently generating about 0.05 per unit of risk. If you would invest  54,275  in Blue Jet Healthcare on October 9, 2024 and sell it today you would earn a total of  3,195  from holding Blue Jet Healthcare or generate 5.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Blue Jet Healthcare  vs.  Fertilizers and Chemicals

Blue Jet Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Jet Healthcare are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking indicators, Blue Jet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fertilizers and Chemicals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizers and Chemicals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fertilizers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Blue Jet and Fertilizers

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

The idea behind Blue Jet Healthcare and Fertilizers and Chemicals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.