Correlation Between BGF Retail and Echomarketing CoLtd

Can any of the company-specific risk be diversified away by investing in both BGF Retail and Echomarketing CoLtd 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 BGF Retail and Echomarketing CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BGF Retail Co and Echomarketing CoLtd, you can compare the effects of market volatilities on BGF Retail and Echomarketing CoLtd 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 BGF Retail with a short position of Echomarketing CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and Echomarketing CoLtd.

Diversification Opportunities for BGF Retail and Echomarketing CoLtd

-0.8

Correlation Coefficient

BGF Retail  Echomarketing CoLtd

Pay attention - limited upside

The 3 months correlation between BGF and Echomarketing is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and Echomarketing CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echomarketing CoLtd and BGF Retail 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 BGF Retail Co are associated (or correlated) with Echomarketing CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echomarketing CoLtd has no effect on the direction of BGF Retail i.e., BGF Retail and Echomarketing CoLtd go up and down completely randomly.

Pair Corralation between BGF Retail and Echomarketing CoLtd

Assuming the 90 days trading horizon BGF Retail Co is expected to generate 0.93 times more return on investment than Echomarketing CoLtd. However, BGF Retail Co is 1.07 times less risky than Echomarketing CoLtd. It trades about 0.12 of its potential returns per unit of risk. Echomarketing CoLtd is currently generating about -0.22 per unit of risk. If you would invest  9,848,615  in BGF Retail Co on December 30, 2024 and sell it today you would earn a total of  1,051,385  from holding BGF Retail Co or generate 10.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BGF Retail Co  vs.  Echomarketing CoLtd

BGF Retail

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BGF Retail Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BGF Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Echomarketing CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Echomarketing CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BGF Retail and Echomarketing CoLtd

The main advantage of trading using opposite BGF Retail and Echomarketing CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail position performs unexpectedly, Echomarketing CoLtd 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 Echomarketing CoLtd will offset losses from the drop in Echomarketing CoLtd's long position.

The idea behind BGF Retail Co and Echomarketing CoLtd 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.