Correlation Between Bluejay Diagnostics and Orthofix Medical

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

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

Diversification Opportunities for Bluejay Diagnostics and Orthofix Medical

-0.72

Correlation Coefficient

Bluejay Diagnostics  Orthofix Medical

Pay attention - limited upside

The 3 months correlation between Bluejay and Orthofix is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bluejay Diagnostics and Orthofix Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orthofix Medical and Bluejay Diagnostics 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 Bluejay Diagnostics are associated (or correlated) with Orthofix Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orthofix Medical has no effect on the direction of Bluejay Diagnostics i.e., Bluejay Diagnostics and Orthofix Medical go up and down completely randomly.

Pair Corralation between Bluejay Diagnostics and Orthofix Medical

Given the investment horizon of 90 days Bluejay Diagnostics is expected to generate 8.64 times more return on investment than Orthofix Medical. However, Bluejay Diagnostics is 8.64 times more volatile than Orthofix Medical. It trades about 0.04 of its potential returns per unit of risk. Orthofix Medical is currently generating about 0.12 per unit of risk. If you would invest  560.00  in Bluejay Diagnostics on September 23, 2024 and sell it today you would lose (176.00) from holding Bluejay Diagnostics or give up 31.43% of portfolio value over 90 days.

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

Bluejay Diagnostics  vs.  Orthofix Medical

Bluejay Diagnostics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluejay Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent fundamental indicators, Bluejay Diagnostics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Orthofix Medical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orthofix Medical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Orthofix Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bluejay Diagnostics and Orthofix Medical

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

The idea behind Bluejay Diagnostics and Orthofix Medical 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.