Correlation Between Blue Moon and BSR Real

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

By analyzing existing cross correlation between Blue Moon Zinc and BSR Real Estate, you can compare the effects of market volatilities on Blue Moon and BSR Real 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 Moon with a short position of BSR Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Moon and BSR Real.

Diversification Opportunities for Blue Moon and BSR Real

-0.55

Correlation Coefficient

Blue Moon  BSR Real

Excellent diversification

The 3 months correlation between Blue and BSR is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Zinc and BSR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSR Real Estate and Blue Moon 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 Moon Zinc are associated (or correlated) with BSR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSR Real Estate has no effect on the direction of Blue Moon i.e., Blue Moon and BSR Real go up and down completely randomly.

Pair Corralation between Blue Moon and BSR Real

Assuming the 90 days trading horizon Blue Moon Zinc is expected to generate 0.56 times more return on investment than BSR Real. However, Blue Moon Zinc is 1.79 times less risky than BSR Real. It trades about 0.21 of its potential returns per unit of risk. BSR Real Estate is currently generating about -0.25 per unit of risk. If you would invest  35.00  in Blue Moon Zinc on September 26, 2024 and sell it today you would earn a total of  1.00  from holding Blue Moon Zinc or generate 2.86% return on investment over 90 days.

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

Blue Moon Zinc  vs.  BSR Real Estate

Blue Moon Zinc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Zinc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Blue Moon showed solid returns over the last few months and may actually be approaching a breakup point.

BSR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BSR Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Blue Moon and BSR Real

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

The idea behind Blue Moon Zinc and BSR Real Estate 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.