Correlation Between Tata Communications and Blue Jet

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

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

Diversification Opportunities for Tata Communications and Blue Jet

-0.1

Correlation Coefficient

Tata Communications  Blue Jet

Good diversification

The 3 months correlation between Tata and Blue is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tata Communications Limited and Blue Jet Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Jet Healthcare and Tata Communications 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 Tata Communications Limited are associated (or correlated) with Blue Jet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Jet Healthcare has no effect on the direction of Tata Communications i.e., Tata Communications and Blue Jet go up and down completely randomly.

Pair Corralation between Tata Communications and Blue Jet

Assuming the 90 days trading horizon Tata Communications Limited is expected to under-perform the Blue Jet. But the stock apears to be less risky and, when comparing its historical volatility, Tata Communications Limited is 1.43 times less risky than Blue Jet. The stock trades about -0.11 of its potential returns per unit of risk. The Blue Jet Healthcare is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  50,663  in Blue Jet Healthcare on September 12, 2024 and sell it today you would lose (313.00) from holding Blue Jet Healthcare or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Tata Communications Limited  vs.  Blue Jet Healthcare

Tata Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tata Communications Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Blue Jet Healthcare

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Blue Jet Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking indicators, Blue Jet is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tata Communications and Blue Jet

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

The idea behind Tata Communications Limited and Blue Jet Healthcare 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.