Correlation Between BlueFocus Communication and Leaguer Shenzhen
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By analyzing existing cross correlation between BlueFocus Communication Group and Leaguer Shenzhen MicroElectronics, you can compare the effects of market volatilities on BlueFocus Communication and Leaguer Shenzhen 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 BlueFocus Communication with a short position of Leaguer Shenzhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueFocus Communication and Leaguer Shenzhen.
Diversification Opportunities for BlueFocus Communication and Leaguer Shenzhen
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlueFocus and Leaguer is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BlueFocus Communication Group and Leaguer Shenzhen MicroElectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaguer Shenzhen Mic and BlueFocus Communication 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 BlueFocus Communication Group are associated (or correlated) with Leaguer Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaguer Shenzhen Mic has no effect on the direction of BlueFocus Communication i.e., BlueFocus Communication and Leaguer Shenzhen go up and down completely randomly.
Pair Corralation between BlueFocus Communication and Leaguer Shenzhen
Assuming the 90 days trading horizon BlueFocus Communication Group is expected to generate 1.14 times more return on investment than Leaguer Shenzhen. However, BlueFocus Communication is 1.14 times more volatile than Leaguer Shenzhen MicroElectronics. It trades about 0.05 of its potential returns per unit of risk. Leaguer Shenzhen MicroElectronics is currently generating about 0.01 per unit of risk. If you would invest 813.00 in BlueFocus Communication Group on September 12, 2024 and sell it today you would earn a total of 347.00 from holding BlueFocus Communication Group or generate 42.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueFocus Communication Group vs. Leaguer Shenzhen MicroElectron
Performance |
| Timeline |
| BlueFocus Communication |
| Leaguer Shenzhen Mic |
BlueFocus Communication and Leaguer Shenzhen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueFocus Communication and Leaguer Shenzhen
The main advantage of trading using opposite BlueFocus Communication and Leaguer Shenzhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueFocus Communication position performs unexpectedly, Leaguer Shenzhen 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 Leaguer Shenzhen will offset losses from the drop in Leaguer Shenzhen's long position.The idea behind BlueFocus Communication Group and Leaguer Shenzhen MicroElectronics 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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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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