Correlation Between BF Investment and Mrs Bectors

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

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

Diversification Opportunities for BF Investment and Mrs Bectors

0.2

Correlation Coefficient

BF Investment  Mrs Bectors

Modest diversification

The 3 months correlation between BFINVEST and Mrs is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BF Investment Limited and Mrs Bectors Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mrs Bectors Food and BF Investment 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 BF Investment Limited are associated (or correlated) with Mrs Bectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mrs Bectors Food has no effect on the direction of BF Investment i.e., BF Investment and Mrs Bectors go up and down completely randomly.

Pair Corralation between BF Investment and Mrs Bectors

Assuming the 90 days trading horizon BF Investment is expected to generate 1.69 times less return on investment than Mrs Bectors. In addition to that, BF Investment is 1.08 times more volatile than Mrs Bectors Food. It trades about 0.03 of its total potential returns per unit of risk. Mrs Bectors Food is currently generating about 0.05 per unit of volatility. If you would invest  118,860  in Mrs Bectors Food on October 14, 2024 and sell it today you would earn a total of  37,170  from holding Mrs Bectors Food or generate 31.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.18%
Values	Daily Returns

BF Investment Limited  vs.  Mrs Bectors Food

BF Investment Limited

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Mrs Bectors Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mrs Bectors Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BF Investment and Mrs Bectors

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

The idea behind BF Investment Limited and Mrs Bectors Food 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.