Correlation Between Bell Financial and Finexia Financial

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

By analyzing existing cross correlation between Bell Financial Group and Finexia Financial Group, you can compare the effects of market volatilities on Bell Financial and Finexia Financial 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 Bell Financial with a short position of Finexia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Financial and Finexia Financial.

Diversification Opportunities for Bell Financial and Finexia Financial

0.21

Correlation Coefficient

Bell Financial  Finexia Financial

Modest diversification

The 3 months correlation between Bell and Finexia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bell Financial Group and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial and Bell Financial 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 Bell Financial Group are associated (or correlated) with Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Bell Financial i.e., Bell Financial and Finexia Financial go up and down completely randomly.

Pair Corralation between Bell Financial and Finexia Financial

Assuming the 90 days trading horizon Bell Financial is expected to generate 2.65 times less return on investment than Finexia Financial. But when comparing it to its historical volatility, Bell Financial Group is 2.46 times less risky than Finexia Financial. It trades about 0.02 of its potential returns per unit of risk. Finexia Financial Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Finexia Financial Group on October 7, 2024 and sell it today you would earn a total of  2.00  from holding Finexia Financial Group or generate 7.14% return on investment over 90 days.

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

Bell Financial Group  vs.  Finexia Financial Group

Bell Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bell Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Bell Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Finexia Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finexia Financial Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Finexia Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bell Financial and Finexia Financial

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

The idea behind Bell Financial Group and Finexia Financial Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.