Correlation Between Blue Sail and Shenzhen Zhenye

Can any of the company-specific risk be diversified away by investing in both Blue Sail and Shenzhen Zhenye 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 Shenzhen Zhenye 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 Shenzhen Zhenye Group, you can compare the effects of market volatilities on Blue Sail and Shenzhen Zhenye 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 Shenzhen Zhenye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Sail and Shenzhen Zhenye.

Diversification Opportunities for Blue Sail and Shenzhen Zhenye

0.79

Correlation Coefficient

Blue Sail  Shenzhen Zhenye

Poor diversification

The 3 months correlation between Blue and Shenzhen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Shenzhen Zhenye Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Zhenye Group 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 Shenzhen Zhenye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Zhenye Group has no effect on the direction of Blue Sail i.e., Blue Sail and Shenzhen Zhenye go up and down completely randomly.

Pair Corralation between Blue Sail and Shenzhen Zhenye

Assuming the 90 days trading horizon Blue Sail Medical is expected to generate 0.49 times more return on investment than Shenzhen Zhenye. However, Blue Sail Medical is 2.03 times less risky than Shenzhen Zhenye. It trades about -0.13 of its potential returns per unit of risk. Shenzhen Zhenye Group is currently generating about -0.11 per unit of risk. If you would invest  556.00  in Blue Sail Medical on September 29, 2024 and sell it today you would lose (28.00) from holding Blue Sail Medical or give up 5.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Blue Sail Medical  vs.  Shenzhen Zhenye Group

Blue Sail Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Sail Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Blue Sail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shenzhen Zhenye Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Zhenye Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Zhenye sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Sail and Shenzhen Zhenye

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

The idea behind Blue Sail Medical and Shenzhen Zhenye Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.