Correlation Between Blue Jet and GPT Healthcare

Can any of the company-specific risk be diversified away by investing in both Blue Jet and GPT 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 Jet and GPT Healthcare 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 GPT Healthcare, you can compare the effects of market volatilities on Blue Jet and GPT 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 Jet with a short position of GPT Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Jet and GPT Healthcare.

Diversification Opportunities for Blue Jet and GPT Healthcare

-0.09

Correlation Coefficient

Blue Jet  GPT Healthcare

Good diversification

The 3 months correlation between Blue and GPT is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Blue Jet Healthcare and GPT Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Healthcare 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 GPT Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Healthcare has no effect on the direction of Blue Jet i.e., Blue Jet and GPT Healthcare go up and down completely randomly.

Pair Corralation between Blue Jet and GPT Healthcare

Assuming the 90 days trading horizon Blue Jet Healthcare is expected to generate 1.2 times more return on investment than GPT Healthcare. However, Blue Jet is 1.2 times more volatile than GPT Healthcare. It trades about 0.09 of its potential returns per unit of risk. GPT Healthcare is currently generating about -0.02 per unit of risk. If you would invest  46,396  in Blue Jet Healthcare on August 31, 2024 and sell it today you would earn a total of  5,909  from holding Blue Jet Healthcare or generate 12.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Blue Jet Healthcare  vs.  GPT Healthcare

Blue Jet Healthcare

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Jet Healthcare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, Blue Jet unveiled solid returns over the last few months and may actually be approaching a breakup point.

GPT Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Blue Jet and GPT Healthcare

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

The idea behind Blue Jet Healthcare and GPT Healthcare 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.