Correlation Between Blue Sail and Risesun Real

Can any of the company-specific risk be diversified away by investing in both Blue Sail and Risesun 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 Sail and Risesun Real 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 Risesun Real Estate, you can compare the effects of market volatilities on Blue Sail and Risesun 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 Sail with a short position of Risesun Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Sail and Risesun Real.

Diversification Opportunities for Blue Sail and Risesun Real

0.86

Correlation Coefficient

Blue Sail  Risesun Real

Very poor diversification

The 3 months correlation between Blue and Risesun is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Risesun Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risesun Real Estate 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 Risesun Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risesun Real Estate has no effect on the direction of Blue Sail i.e., Blue Sail and Risesun Real go up and down completely randomly.

Pair Corralation between Blue Sail and Risesun Real

Assuming the 90 days trading horizon Blue Sail Medical is expected to under-perform the Risesun Real. But the stock apears to be less risky and, when comparing its historical volatility, Blue Sail Medical is 2.07 times less risky than Risesun Real. The stock trades about -0.01 of its potential returns per unit of risk. The Risesun Real Estate is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  178.00  in Risesun Real Estate on September 28, 2024 and sell it today you would earn a total of  1.00  from holding Risesun Real Estate or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Blue Sail Medical  vs.  Risesun Real Estate

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.

Risesun Real Estate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Risesun Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Risesun Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blue Sail and Risesun Real

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

The idea behind Blue Sail Medical and Risesun 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.