Correlation Between Blue Jet and Malu Paper

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

Diversification Opportunities for Blue Jet and Malu Paper

-0.56

Correlation Coefficient

Blue Jet  Malu Paper

Excellent diversification

The 3 months correlation between Blue and Malu is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Blue Jet Healthcare and Malu Paper Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malu Paper Mills 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 Malu Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malu Paper Mills has no effect on the direction of Blue Jet i.e., Blue Jet and Malu Paper go up and down completely randomly.

Pair Corralation between Blue Jet and Malu Paper

Assuming the 90 days trading horizon Blue Jet Healthcare is expected to generate 1.1 times more return on investment than Malu Paper. However, Blue Jet is 1.1 times more volatile than Malu Paper Mills. It trades about 0.24 of its potential returns per unit of risk. Malu Paper Mills is currently generating about -0.12 per unit of risk. If you would invest  55,290  in Blue Jet Healthcare on December 25, 2024 and sell it today you would earn a total of  32,710  from holding Blue Jet Healthcare or generate 59.16% return on investment over 90 days.

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

Blue Jet Healthcare  vs.  Malu Paper Mills

Blue Jet Healthcare

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Jet Healthcare are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking indicators, Blue Jet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Malu Paper Mills

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malu Paper Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Blue Jet and Malu Paper

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

The idea behind Blue Jet Healthcare and Malu Paper Mills 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..