Correlation Between Forth Public and Bluebik Group

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

By analyzing existing cross correlation between Forth Public and Bluebik Group PCL, you can compare the effects of market volatilities on Forth Public and Bluebik Group 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 Forth Public with a short position of Bluebik Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forth Public and Bluebik Group.

Diversification Opportunities for Forth Public and Bluebik Group

-0.39

Correlation Coefficient

Forth Public  Bluebik Group

Very good diversification

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

Pair Corralation between Forth Public and Bluebik Group

Assuming the 90 days trading horizon Forth Public is expected to under-perform the Bluebik Group. But the stock apears to be less risky and, when comparing its historical volatility, Forth Public is 1.01 times less risky than Bluebik Group. The stock trades about -0.24 of its potential returns per unit of risk. The Bluebik Group PCL is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  4,250  in Bluebik Group PCL on September 25, 2024 and sell it today you would lose (250.00) from holding Bluebik Group PCL or give up 5.88% of portfolio value over 90 days.

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

Forth Public  vs.  Bluebik Group PCL

Forth Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forth Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bluebik Group PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluebik Group PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bluebik Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Forth Public and Bluebik Group

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

The idea behind Forth Public and Bluebik Group PCL 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.