Correlation Between BF Utilities and Globus Spirits

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

Diversification Opportunities for BF Utilities and Globus Spirits

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between BFUTILITIE and Globus is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BF Utilities Limited and Globus Spirits Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Spirits and BF Utilities 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 Utilities Limited are associated (or correlated) with Globus Spirits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globus Spirits has no effect on the direction of BF Utilities i.e., BF Utilities and Globus Spirits go up and down completely randomly.

Pair Corralation between BF Utilities and Globus Spirits

Assuming the 90 days trading horizon BF Utilities Limited is expected to generate 0.5 times more return on investment than Globus Spirits. However, BF Utilities Limited is 2.01 times less risky than Globus Spirits. It trades about 0.4 of its potential returns per unit of risk. Globus Spirits Limited is currently generating about -0.19 per unit of risk. If you would invest  84,800  in BF Utilities Limited on September 3, 2024 and sell it today you would earn a total of  13,815  from holding BF Utilities Limited or generate 16.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BF Utilities Limited  vs.  Globus Spirits Limited

 Performance 
       Timeline  
BF Utilities Limited 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BF Utilities Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, BF Utilities demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Globus Spirits 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Globus Spirits Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BF Utilities and Globus Spirits Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BF Utilities and Globus Spirits

The main advantage of trading using opposite BF Utilities and Globus Spirits positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BF Utilities position performs unexpectedly, Globus Spirits 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 Globus Spirits will offset losses from the drop in Globus Spirits' long position.
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The idea behind BF Utilities Limited and Globus Spirits Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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