Correlation Between Stem Holdings and Blueberries Medical

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

By analyzing existing cross correlation between Stem Holdings and Blueberries Medical Corp, you can compare the effects of market volatilities on Stem Holdings and Blueberries Medical 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 Stem Holdings with a short position of Blueberries Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem Holdings and Blueberries Medical.

Diversification Opportunities for Stem Holdings and Blueberries Medical

0.07

Correlation Coefficient

Stem Holdings  Blueberries Medical

Significant diversification

The 3 months correlation between Stem and Blueberries is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Stem Holdings and Blueberries Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blueberries Medical Corp and Stem Holdings 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 Stem Holdings are associated (or correlated) with Blueberries Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blueberries Medical Corp has no effect on the direction of Stem Holdings i.e., Stem Holdings and Blueberries Medical go up and down completely randomly.

Pair Corralation between Stem Holdings and Blueberries Medical

Given the investment horizon of 90 days Stem Holdings is expected to generate 6.98 times more return on investment than Blueberries Medical. However, Stem Holdings is 6.98 times more volatile than Blueberries Medical Corp. It trades about 0.13 of its potential returns per unit of risk. Blueberries Medical Corp is currently generating about 0.06 per unit of risk. If you would invest  0.00  in Stem Holdings on December 30, 2024 and sell it today you would earn a total of  0.01  from holding Stem Holdings or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Stem Holdings  vs.  Blueberries Medical Corp

Stem Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stem Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile primary indicators, Stem Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Blueberries Medical Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blueberries Medical Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blueberries Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stem Holdings and Blueberries Medical

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

The idea behind Stem Holdings and Blueberries Medical Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.