Correlation Between INC Research and Blueberries Medical

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

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

Diversification Opportunities for INC Research and Blueberries Medical

0.74

Correlation Coefficient

INC Research  Blueberries Medical

Poor diversification

The 3 months correlation between INC and Blueberries is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding INC Research Holdings and Blueberries Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blueberries Medical Corp and INC Research 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 INC Research Holdings are associated (or correlated) with Blueberries Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blueberries Medical Corp has no effect on the direction of INC Research i.e., INC Research and Blueberries Medical go up and down completely randomly.

Pair Corralation between INC Research and Blueberries Medical

Given the investment horizon of 90 days INC Research Holdings is expected to under-perform the Blueberries Medical. But the stock apears to be less risky and, when comparing its historical volatility, INC Research Holdings is 2.19 times less risky than Blueberries Medical. The stock trades about -0.07 of its potential returns per unit of risk. The Blueberries Medical Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.30  in Blueberries Medical Corp on September 20, 2024 and sell it today you would lose (0.30) from holding Blueberries Medical Corp or give up 23.08% of portfolio value over 90 days.

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

INC Research Holdings  vs.  Blueberries Medical Corp

INC Research Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INC Research Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Blueberries Medical Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Blueberries Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Blueberries Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with INC Research and Blueberries Medical

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

The idea behind INC Research Holdings and Blueberries Medical Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.