Correlation Between Grand Havana and Blue Star

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

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

Diversification Opportunities for Grand Havana and Blue Star

0.29

Correlation Coefficient

Grand Havana  Blue Star

Modest diversification

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

Pair Corralation between Grand Havana and Blue Star

Given the investment horizon of 90 days Grand Havana is expected to generate 0.95 times more return on investment than Blue Star. However, Grand Havana is 1.06 times less risky than Blue Star. It trades about -0.03 of its potential returns per unit of risk. Blue Star Foods is currently generating about -0.12 per unit of risk. If you would invest  0.12  in Grand Havana on September 3, 2024 and sell it today you would lose (0.05) from holding Grand Havana or give up 41.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Grand Havana  vs.  Blue Star Foods

Grand Havana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Havana has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Blue Star Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Star Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Grand Havana and Blue Star

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

The idea behind Grand Havana and Blue Star Foods 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.