Correlation Between BF Utilities and Arrow Greentech

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

Diversification Opportunities for BF Utilities and Arrow Greentech

-0.11

Correlation Coefficient

BF Utilities  Arrow Greentech

Good diversification

The 3 months correlation between BFUTILITIE and Arrow is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BF Utilities Limited and Arrow Greentech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Greentech 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 Arrow Greentech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Greentech has no effect on the direction of BF Utilities i.e., BF Utilities and Arrow Greentech go up and down completely randomly.

Pair Corralation between BF Utilities and Arrow Greentech

Assuming the 90 days trading horizon BF Utilities Limited is expected to under-perform the Arrow Greentech. But the stock apears to be less risky and, when comparing its historical volatility, BF Utilities Limited is 1.15 times less risky than Arrow Greentech. The stock trades about -0.02 of its potential returns per unit of risk. The Arrow Greentech Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  79,560  in Arrow Greentech Limited on October 9, 2024 and sell it today you would lose (2,820) from holding Arrow Greentech Limited or give up 3.54% of portfolio value over 90 days.

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

BF Utilities Limited  vs.  Arrow Greentech Limited

BF Utilities Limited

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, BF Utilities is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Arrow Greentech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Greentech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Arrow Greentech is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BF Utilities and Arrow Greentech

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

The idea behind BF Utilities Limited and Arrow Greentech Limited 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 CEOs Directory module to screen CEOs from public companies around the world.