Correlation Between BF Utilities and Amrutanjan Health

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

Diversification Opportunities for BF Utilities and Amrutanjan Health

0.94

Correlation Coefficient

BF Utilities  Amrutanjan Health

Almost no diversification

The 3 months correlation between BFUTILITIE and Amrutanjan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BF Utilities Limited and Amrutanjan Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amrutanjan Health Care 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 Amrutanjan Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amrutanjan Health Care has no effect on the direction of BF Utilities i.e., BF Utilities and Amrutanjan Health go up and down completely randomly.

Pair Corralation between BF Utilities and Amrutanjan Health

Assuming the 90 days trading horizon BF Utilities Limited is expected to under-perform the Amrutanjan Health. In addition to that, BF Utilities is 2.08 times more volatile than Amrutanjan Health Care. It trades about -0.07 of its total potential returns per unit of risk. Amrutanjan Health Care is currently generating about -0.04 per unit of volatility. If you would invest  69,806  in Amrutanjan Health Care on December 30, 2024 and sell it today you would lose (4,596) from holding Amrutanjan Health Care or give up 6.58% of portfolio value over 90 days.

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

BF Utilities Limited  vs.  Amrutanjan Health Care

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 weak 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.

Amrutanjan Health Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amrutanjan Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, Amrutanjan Health is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BF Utilities and Amrutanjan Health

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

The idea behind BF Utilities Limited and Amrutanjan Health Care 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.