Correlation Between Blue Sail and Epoxy Base

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Can any of the company-specific risk be diversified away by investing in both Blue Sail and Epoxy Base 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 Sail and Epoxy Base into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Sail Medical and Epoxy Base Electronic, you can compare the effects of market volatilities on Blue Sail and Epoxy Base 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 Sail with a short position of Epoxy Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Sail and Epoxy Base.

Diversification Opportunities for Blue Sail and Epoxy Base

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Blue and Epoxy is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Epoxy Base Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epoxy Base Electronic and Blue Sail 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 Sail Medical are associated (or correlated) with Epoxy Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epoxy Base Electronic has no effect on the direction of Blue Sail i.e., Blue Sail and Epoxy Base go up and down completely randomly.

Pair Corralation between Blue Sail and Epoxy Base

Assuming the 90 days trading horizon Blue Sail is expected to generate 3.31 times less return on investment than Epoxy Base. But when comparing it to its historical volatility, Blue Sail Medical is 1.96 times less risky than Epoxy Base. It trades about 0.07 of its potential returns per unit of risk. Epoxy Base Electronic is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  528.00  in Epoxy Base Electronic on August 31, 2024 and sell it today you would earn a total of  42.00  from holding Epoxy Base Electronic or generate 7.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Blue Sail Medical  vs.  Epoxy Base Electronic

 Performance 
       Timeline  
Blue Sail Medical 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Blue Sail Medical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Blue Sail sustained solid returns over the last few months and may actually be approaching a breakup point.
Epoxy Base Electronic 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Epoxy Base Electronic are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Epoxy Base sustained solid returns over the last few months and may actually be approaching a breakup point.

Blue Sail and Epoxy Base Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blue Sail and Epoxy Base

The main advantage of trading using opposite Blue Sail and Epoxy Base positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Sail position performs unexpectedly, Epoxy Base 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 Epoxy Base will offset losses from the drop in Epoxy Base's long position.
The idea behind Blue Sail Medical and Epoxy Base Electronic 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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