Correlation Between II Group and Bluebik Group

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

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

Diversification Opportunities for II Group and Bluebik Group

-0.4

Correlation Coefficient

II Group  Bluebik Group

Very good diversification

The 3 months correlation between IIG and Bluebik is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding II Group 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 II Group 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 II Group 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 II Group i.e., II Group and Bluebik Group go up and down completely randomly.

Pair Corralation between II Group and Bluebik Group

Assuming the 90 days trading horizon II Group Public is expected to under-perform the Bluebik Group. In addition to that, II Group is 1.72 times more volatile than Bluebik Group PCL. It trades about -0.15 of its total potential returns per unit of risk. Bluebik Group PCL is currently generating about 0.01 per unit of volatility. If you would invest  4,000  in Bluebik Group PCL on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Bluebik Group PCL or generate 0.0% return on investment over 90 days.

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

II Group Public  vs.  Bluebik Group PCL

II Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days II Group 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 II Group and Bluebik Group

The main advantage of trading using opposite II Group and Bluebik Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if II Group 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 II Group 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.