Correlation Between Power Finance and BLS International
Can any of the company-specific risk be diversified away by investing in both Power Finance and BLS International 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 Power Finance and BLS International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Finance and BLS International Services, you can compare the effects of market volatilities on Power Finance and BLS International 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 Power Finance with a short position of BLS International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Finance and BLS International.
Diversification Opportunities for Power Finance and BLS International
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Power and BLS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Power Finance and BLS International Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLS International and Power Finance 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 Power Finance are associated (or correlated) with BLS International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLS International has no effect on the direction of Power Finance i.e., Power Finance and BLS International go up and down completely randomly.
Pair Corralation between Power Finance and BLS International
Assuming the 90 days trading horizon Power Finance is expected to generate 1.27 times more return on investment than BLS International. However, Power Finance is 1.27 times more volatile than BLS International Services. It trades about 0.1 of its potential returns per unit of risk. BLS International Services is currently generating about 0.07 per unit of risk. If you would invest 10,570 in Power Finance on September 2, 2024 and sell it today you would earn a total of 38,960 from holding Power Finance or generate 368.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Power Finance vs. BLS International Services
Performance |
| Timeline |
| Power Finance |
| BLS International |
Power Finance and BLS International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Finance and BLS International
The main advantage of trading using opposite Power Finance and BLS International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Finance position performs unexpectedly, BLS International 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 BLS International will offset losses from the drop in BLS International's long position.| Power Finance vs. State Bank of | Power Finance vs. Life Insurance | Power Finance vs. HDFC Bank Limited | Power Finance vs. ICICI Bank Limited |
| BLS International vs. Juniper Hotels | BLS International vs. Blue Coast Hotels | BLS International vs. Apollo Sindoori Hotels | BLS International vs. Rajnandini Metal Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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