Correlation Between BF Investment and Kewal Kiran

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

Diversification Opportunities for BF Investment and Kewal Kiran

-0.68

Correlation Coefficient

BF Investment  Kewal Kiran

Excellent diversification

The 3 months correlation between BFINVEST and Kewal is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BF Investment Limited and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing 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 Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of BF Investment i.e., BF Investment and Kewal Kiran go up and down completely randomly.

Pair Corralation between BF Investment and Kewal Kiran

Assuming the 90 days trading horizon BF Investment is expected to generate 37.43 times less return on investment than Kewal Kiran. But when comparing it to its historical volatility, BF Investment Limited is 1.18 times less risky than Kewal Kiran. It trades about 0.0 of its potential returns per unit of risk. Kewal Kiran Clothing is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  60,340  in Kewal Kiran Clothing on September 19, 2024 and sell it today you would earn a total of  2,335  from holding Kewal Kiran Clothing or generate 3.87% return on investment over 90 days.

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

BF Investment Limited  vs.  Kewal Kiran Clothing

BF Investment Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BF Investment Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, BF Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kewal Kiran Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kewal Kiran Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kewal Kiran 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 BF Investment and Kewal Kiran

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

The idea behind BF Investment Limited and Kewal Kiran Clothing 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.