Correlation Between BF Investment and Kalyani Investment

Can any of the company-specific risk be diversified away by investing in both BF Investment and Kalyani 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 BF Investment and Kalyani Investment 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 Kalyani Investment, you can compare the effects of market volatilities on BF Investment and Kalyani 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 BF Investment with a short position of Kalyani Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BF Investment and Kalyani Investment.

Diversification Opportunities for BF Investment and Kalyani Investment

0.37

Correlation Coefficient

BF Investment  Kalyani Investment

Weak diversification

The 3 months correlation between BFINVEST and Kalyani is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BF Investment Limited and Kalyani Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Investment 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 Kalyani Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Investment has no effect on the direction of BF Investment i.e., BF Investment and Kalyani Investment go up and down completely randomly.

Pair Corralation between BF Investment and Kalyani Investment

Assuming the 90 days trading horizon BF Investment is expected to generate 1.56 times less return on investment than Kalyani Investment. In addition to that, BF Investment is 1.15 times more volatile than Kalyani Investment. It trades about 0.06 of its total potential returns per unit of risk. Kalyani Investment is currently generating about 0.1 per unit of volatility. If you would invest  185,745  in Kalyani Investment on September 29, 2024 and sell it today you would earn a total of  410,645  from holding Kalyani Investment or generate 221.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

BF Investment Limited  vs.  Kalyani Investment

BF Investment Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BF Investment Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, BF Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kalyani Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kalyani Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kalyani Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BF Investment and Kalyani Investment

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

The idea behind BF Investment Limited and Kalyani Investment 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.