Correlation Between HMT and Blue Jet

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

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

Diversification Opportunities for HMT and Blue Jet

-0.62

Correlation Coefficient

HMT  Blue Jet

Excellent diversification

The 3 months correlation between HMT and Blue is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding HMT Limited and Blue Jet Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Jet Healthcare and HMT 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 HMT Limited are associated (or correlated) with Blue Jet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Jet Healthcare has no effect on the direction of HMT i.e., HMT and Blue Jet go up and down completely randomly.

Pair Corralation between HMT and Blue Jet

Assuming the 90 days trading horizon HMT Limited is expected to under-perform the Blue Jet. But the stock apears to be less risky and, when comparing its historical volatility, HMT Limited is 1.28 times less risky than Blue Jet. The stock trades about -0.2 of its potential returns per unit of risk. The Blue Jet Healthcare is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  58,645  in Blue Jet Healthcare on December 2, 2024 and sell it today you would earn a total of  16,755  from holding Blue Jet Healthcare or generate 28.57% return on investment over 90 days.

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

HMT Limited  vs.  Blue Jet Healthcare

HMT Limited

Risk-Adjusted Performance

Very Weak

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

Blue Jet Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Jet Healthcare are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking indicators, Blue Jet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HMT and Blue Jet

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

The idea behind HMT Limited and Blue Jet 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.