Correlation Between Blue Star and Universal Robina

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

By analyzing existing cross correlation between Blue Star Foods and Universal Robina Corp, you can compare the effects of market volatilities on Blue Star and Universal Robina 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 Star with a short position of Universal Robina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Universal Robina.

Diversification Opportunities for Blue Star and Universal Robina

0.16

Correlation Coefficient

Blue Star  Universal Robina

Average diversification

The 3 months correlation between Blue and Universal is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Foods and Universal Robina Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Robina Corp and Blue Star 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 Star Foods are associated (or correlated) with Universal Robina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Robina Corp has no effect on the direction of Blue Star i.e., Blue Star and Universal Robina go up and down completely randomly.

Pair Corralation between Blue Star and Universal Robina

Given the investment horizon of 90 days Blue Star Foods is expected to generate 12.74 times more return on investment than Universal Robina. However, Blue Star is 12.74 times more volatile than Universal Robina Corp. It trades about 0.01 of its potential returns per unit of risk. Universal Robina Corp is currently generating about -0.16 per unit of risk. If you would invest  505.00  in Blue Star Foods on February 28, 2024 and sell it today you would lose (237.01) from holding Blue Star Foods or give up 46.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Blue Star Foods  vs.  Universal Robina Corp

Blue Star Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Star Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, Blue Star may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Universal Robina Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Robina Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Blue Star and Universal Robina

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

The idea behind Blue Star Foods and Universal Robina 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.