Correlation Between Blue Jet and Ortel Communications

Can any of the company-specific risk be diversified away by investing in both Blue Jet and Ortel Communications 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 Jet and Ortel Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Jet Healthcare and Ortel Communications Limited, you can compare the effects of market volatilities on Blue Jet and Ortel Communications 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 Jet with a short position of Ortel Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Jet and Ortel Communications.

Diversification Opportunities for Blue Jet and Ortel Communications

-0.46

Correlation Coefficient

Blue Jet  Ortel Communications

Very good diversification

The 3 months correlation between Blue and Ortel is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Blue Jet Healthcare and Ortel Communications Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ortel Communications and Blue Jet 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 Jet Healthcare are associated (or correlated) with Ortel Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ortel Communications has no effect on the direction of Blue Jet i.e., Blue Jet and Ortel Communications go up and down completely randomly.

Pair Corralation between Blue Jet and Ortel Communications

Assuming the 90 days trading horizon Blue Jet Healthcare is expected to generate 1.11 times more return on investment than Ortel Communications. However, Blue Jet is 1.11 times more volatile than Ortel Communications Limited. It trades about 0.07 of its potential returns per unit of risk. Ortel Communications Limited is currently generating about -0.1 per unit of risk. If you would invest  47,469  in Blue Jet Healthcare on September 3, 2024 and sell it today you would earn a total of  4,471  from holding Blue Jet Healthcare or generate 9.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Blue Jet Healthcare  vs.  Ortel Communications Limited

Blue Jet Healthcare

Risk-Adjusted Performance

5 of 100

Modest

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

Ortel Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ortel Communications Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Blue Jet and Ortel Communications

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

The idea behind Blue Jet Healthcare and Ortel Communications Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.