Correlation Between Blue Jet and Garware Hi

Can any of the company-specific risk be diversified away by investing in both Blue Jet and Garware Hi 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 Garware Hi 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 Garware Hi Tech Films, you can compare the effects of market volatilities on Blue Jet and Garware Hi 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 Garware Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Jet and Garware Hi.

Diversification Opportunities for Blue Jet and Garware Hi

0.47

Correlation Coefficient

Blue Jet  Garware Hi

Very weak diversification

The 3 months correlation between Blue and Garware is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Blue Jet Healthcare and Garware Hi Tech Films in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Hi Tech 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 Garware Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Hi Tech has no effect on the direction of Blue Jet i.e., Blue Jet and Garware Hi go up and down completely randomly.

Pair Corralation between Blue Jet and Garware Hi

Assuming the 90 days trading horizon Blue Jet is expected to generate 4.23 times less return on investment than Garware Hi. But when comparing it to its historical volatility, Blue Jet Healthcare is 1.48 times less risky than Garware Hi. It trades about 0.05 of its potential returns per unit of risk. Garware Hi Tech Films is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  85,795  in Garware Hi Tech Films on September 30, 2024 and sell it today you would earn a total of  434,640  from holding Garware Hi Tech Films or generate 506.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.42%
Values	Daily Returns

Blue Jet Healthcare  vs.  Garware Hi Tech Films

Blue Jet Healthcare

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Jet Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking indicators, Blue Jet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Garware Hi Tech

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Jet and Garware Hi

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

The idea behind Blue Jet Healthcare and Garware Hi Tech Films 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.