Correlation Between BF Investment and Bharat Road

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Can any of the company-specific risk be diversified away by investing in both BF Investment and Bharat Road 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 BF Investment and Bharat Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BF Investment Limited and Bharat Road Network, you can compare the effects of market volatilities on BF Investment and Bharat Road 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 BF Investment with a short position of Bharat Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of BF Investment and Bharat Road.

Diversification Opportunities for BF Investment and Bharat Road

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between BFINVEST and Bharat is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding BF Investment Limited and Bharat Road Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bharat Road Network and BF Investment 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 BF Investment Limited are associated (or correlated) with Bharat Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bharat Road Network has no effect on the direction of BF Investment i.e., BF Investment and Bharat Road go up and down completely randomly.

Pair Corralation between BF Investment and Bharat Road

Assuming the 90 days trading horizon BF Investment Limited is expected to generate 0.93 times more return on investment than Bharat Road. However, BF Investment Limited is 1.08 times less risky than Bharat Road. It trades about 0.06 of its potential returns per unit of risk. Bharat Road Network is currently generating about 0.03 per unit of risk. If you would invest  30,740  in BF Investment Limited on October 23, 2024 and sell it today you would earn a total of  29,550  from holding BF Investment Limited or generate 96.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BF Investment Limited  vs.  Bharat Road Network

 Performance 
       Timeline  
BF Investment Limited 

Risk-Adjusted Performance

0 of 100

 
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Strong
Very Weak
Over the last 90 days BF Investment Limited 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Bharat Road Network 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Bharat Road Network are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bharat Road may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BF Investment and Bharat Road Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BF Investment and Bharat Road

The main advantage of trading using opposite BF Investment and Bharat Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BF Investment position performs unexpectedly, Bharat Road 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 Bharat Road will offset losses from the drop in Bharat Road's long position.
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The idea behind BF Investment Limited and Bharat Road Network 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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Check out your portfolio center.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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