Correlation Between Bajaj Healthcare and BF Investment

Can any of the company-specific risk be diversified away by investing in both Bajaj Healthcare 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 Bajaj Healthcare and BF Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bajaj Healthcare Limited and BF Investment Limited, you can compare the effects of market volatilities on Bajaj Healthcare 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 Bajaj Healthcare with a short position of BF Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bajaj Healthcare and BF Investment.

Diversification Opportunities for Bajaj Healthcare and BF Investment

-0.74

Correlation Coefficient

Bajaj Healthcare  BF Investment

Pay attention - limited upside

The 3 months correlation between Bajaj and BFINVEST is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Healthcare Limited 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 Bajaj Healthcare 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 Bajaj Healthcare Limited 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 Bajaj Healthcare i.e., Bajaj Healthcare and BF Investment go up and down completely randomly.

Pair Corralation between Bajaj Healthcare and BF Investment

Assuming the 90 days trading horizon Bajaj Healthcare Limited is expected to generate 2.28 times more return on investment than BF Investment. However, Bajaj Healthcare is 2.28 times more volatile than BF Investment Limited. It trades about 0.14 of its potential returns per unit of risk. BF Investment Limited is currently generating about -0.32 per unit of risk. If you would invest  39,420  in Bajaj Healthcare Limited on December 1, 2024 and sell it today you would earn a total of  20,930  from holding Bajaj Healthcare Limited or generate 53.09% return on investment over 90 days.

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

Bajaj Healthcare Limited  vs.  BF Investment Limited

Bajaj Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Healthcare Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Bajaj Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

BF Investment Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bajaj Healthcare and BF Investment

The main advantage of trading using opposite Bajaj Healthcare and BF Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bajaj Healthcare 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.

The idea behind Bajaj Healthcare Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.