Correlation Between Bosch and Barbeque Nation

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

Diversification Opportunities for Bosch and Barbeque Nation

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Bosch and Barbeque is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bosch Limited and Barbeque Nation Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barbeque Nation Hosp and Bosch 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 Bosch Limited are associated (or correlated) with Barbeque Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barbeque Nation Hosp has no effect on the direction of Bosch i.e., Bosch and Barbeque Nation go up and down completely randomly.

Pair Corralation between Bosch and Barbeque Nation

Assuming the 90 days trading horizon Bosch Limited is expected to generate 0.73 times more return on investment than Barbeque Nation. However, Bosch Limited is 1.38 times less risky than Barbeque Nation. It trades about -0.52 of its potential returns per unit of risk. Barbeque Nation Hospitality is currently generating about -0.57 per unit of risk. If you would invest  3,649,900  in Bosch Limited on October 17, 2024 and sell it today you would lose (503,505) from holding Bosch Limited or give up 13.8% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Bosch Limited  vs.  Barbeque Nation Hospitality

 Performance 
       Timeline  
Bosch Limited 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Bosch 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 essential 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.
Barbeque Nation Hosp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Barbeque Nation Hospitality 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 basic 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.

Bosch and Barbeque Nation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bosch and Barbeque Nation

The main advantage of trading using opposite Bosch and Barbeque Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bosch position performs unexpectedly, Barbeque Nation 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 Barbeque Nation will offset losses from the drop in Barbeque Nation's long position.
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The idea behind Bosch Limited and Barbeque Nation Hospitality 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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