Correlation Between POWERGRID Infrastructure and Bombay Burmah
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By analyzing existing cross correlation between POWERGRID Infrastructure Investment and Bombay Burmah Trading, you can compare the effects of market volatilities on POWERGRID Infrastructure and Bombay Burmah 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 POWERGRID Infrastructure with a short position of Bombay Burmah. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWERGRID Infrastructure and Bombay Burmah.
Diversification Opportunities for POWERGRID Infrastructure and Bombay Burmah
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POWERGRID and Bombay is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding POWERGRID Infrastructure Inves and Bombay Burmah Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombay Burmah Trading and POWERGRID Infrastructure 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 POWERGRID Infrastructure Investment are associated (or correlated) with Bombay Burmah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombay Burmah Trading has no effect on the direction of POWERGRID Infrastructure i.e., POWERGRID Infrastructure and Bombay Burmah go up and down completely randomly.
Pair Corralation between POWERGRID Infrastructure and Bombay Burmah
Assuming the 90 days trading horizon POWERGRID Infrastructure Investment is expected to generate 0.27 times more return on investment than Bombay Burmah. However, POWERGRID Infrastructure Investment is 3.72 times less risky than Bombay Burmah. It trades about -0.55 of its potential returns per unit of risk. Bombay Burmah Trading is currently generating about -0.29 per unit of risk. If you would invest 8,170 in POWERGRID Infrastructure Investment on December 13, 2024 and sell it today you would lose (585.00) from holding POWERGRID Infrastructure Investment or give up 7.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
POWERGRID Infrastructure Inves vs. Bombay Burmah Trading
Performance |
| Timeline |
| POWERGRID Infrastructure |
| Bombay Burmah Trading |
POWERGRID Infrastructure and Bombay Burmah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POWERGRID Infrastructure and Bombay Burmah
The main advantage of trading using opposite POWERGRID Infrastructure and Bombay Burmah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWERGRID Infrastructure position performs unexpectedly, Bombay Burmah 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 Bombay Burmah will offset losses from the drop in Bombay Burmah's long position.The idea behind POWERGRID Infrastructure Investment and Bombay Burmah Trading 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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