Correlation Between Fino Payments and BF Investment

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

Diversification Opportunities for Fino Payments and BF Investment

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Fino and BFINVEST is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fino Payments Bank and BF Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BF Investment Limited and Fino Payments 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 Fino Payments Bank are associated (or correlated) with BF Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BF Investment Limited has no effect on the direction of Fino Payments i.e., Fino Payments and BF Investment go up and down completely randomly.

Pair Corralation between Fino Payments and BF Investment

Assuming the 90 days trading horizon Fino Payments is expected to generate 1.33 times less return on investment than BF Investment. In addition to that, Fino Payments is 1.0 times more volatile than BF Investment Limited. It trades about 0.02 of its total potential returns per unit of risk. BF Investment Limited is currently generating about 0.02 per unit of volatility. If you would invest  41,560  in BF Investment Limited on November 27, 2024 and sell it today you would earn a total of  3,755  from holding BF Investment Limited or generate 9.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Fino Payments Bank  vs.  BF Investment Limited

 Performance 
       Timeline  
Fino Payments Bank 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fino Payments Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
BF Investment Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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 weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fino Payments and BF Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fino Payments and BF Investment

The main advantage of trading using opposite Fino Payments and BF Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fino Payments position performs unexpectedly, BF Investment 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 BF Investment will offset losses from the drop in BF Investment's long position.
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The idea behind Fino Payments Bank and BF Investment 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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