Correlation Between China BlueChemical and ASURE SOFTWARE

Can any of the company-specific risk be diversified away by investing in both China BlueChemical and ASURE SOFTWARE 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 China BlueChemical and ASURE SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for China BlueChemical and ASURE SOFTWARE

0.32

Correlation Coefficient

China BlueChemical  ASURE SOFTWARE

Weak diversification

The 3 months correlation between China and ASURE is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and ASURE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASURE SOFTWARE and China BlueChemical 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 China BlueChemical are associated (or correlated) with ASURE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASURE SOFTWARE has no effect on the direction of China BlueChemical i.e., China BlueChemical and ASURE SOFTWARE go up and down completely randomly.

Pair Corralation between China BlueChemical and ASURE SOFTWARE

Assuming the 90 days horizon China BlueChemical is expected to generate 1.55 times less return on investment than ASURE SOFTWARE. In addition to that, China BlueChemical is 1.25 times more volatile than ASURE SOFTWARE. It trades about 0.06 of its total potential returns per unit of risk. ASURE SOFTWARE is currently generating about 0.11 per unit of volatility. If you would invest  760.00  in ASURE SOFTWARE on September 5, 2024 and sell it today you would earn a total of  150.00  from holding ASURE SOFTWARE or generate 19.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

China BlueChemical  vs.  ASURE SOFTWARE

China BlueChemical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China BlueChemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China BlueChemical reported solid returns over the last few months and may actually be approaching a breakup point.

ASURE SOFTWARE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASURE SOFTWARE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ASURE SOFTWARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China BlueChemical and ASURE SOFTWARE

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

The idea behind China BlueChemical and ASURE SOFTWARE 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 Transaction History module to view history of all your transactions and understand their impact on performance.