Correlation Between BF Utilities and AUTHUM INVESTMENT

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

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

Diversification Opportunities for BF Utilities and AUTHUM INVESTMENT

0.48

Correlation Coefficient

BF Utilities  AUTHUM INVESTMENT

Very weak diversification

The 3 months correlation between BFUTILITIE and AUTHUM is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BF Utilities Limited and AUTHUM INVESTMENT INFRASTRUCTU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTHUM INVESTMENT and BF Utilities 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 Utilities Limited are associated (or correlated) with AUTHUM INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTHUM INVESTMENT has no effect on the direction of BF Utilities i.e., BF Utilities and AUTHUM INVESTMENT go up and down completely randomly.

Pair Corralation between BF Utilities and AUTHUM INVESTMENT

Assuming the 90 days trading horizon BF Utilities Limited is expected to under-perform the AUTHUM INVESTMENT. In addition to that, BF Utilities is 1.0 times more volatile than AUTHUM INVESTMENT INFRASTRUCTU. It trades about -0.21 of its total potential returns per unit of risk. AUTHUM INVESTMENT INFRASTRUCTU is currently generating about -0.05 per unit of volatility. If you would invest  160,310  in AUTHUM INVESTMENT INFRASTRUCTU on December 1, 2024 and sell it today you would lose (19,350) from holding AUTHUM INVESTMENT INFRASTRUCTU or give up 12.07% of portfolio value over 90 days.

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

BF Utilities Limited  vs.  AUTHUM INVESTMENT INFRASTRUCTU

BF Utilities Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days BF Utilities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

AUTHUM INVESTMENT

Risk-Adjusted Performance

Very Weak

Over the last 90 days AUTHUM INVESTMENT INFRASTRUCTU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BF Utilities and AUTHUM INVESTMENT

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

The idea behind BF Utilities Limited and AUTHUM INVESTMENT INFRASTRUCTU 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 Transaction History module to view history of all your transactions and understand their impact on performance.