Correlation Between BF Utilities and Can Fin

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

Diversification Opportunities for BF Utilities and Can Fin

-0.19

Correlation Coefficient

BF Utilities  Can Fin

Good diversification

The 3 months correlation between BFUTILITIE and Can is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BF Utilities Limited and Can Fin Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Can Fin Homes 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 Can Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Can Fin Homes has no effect on the direction of BF Utilities i.e., BF Utilities and Can Fin go up and down completely randomly.

Pair Corralation between BF Utilities and Can Fin

Assuming the 90 days trading horizon BF Utilities Limited is expected to generate 1.86 times more return on investment than Can Fin. However, BF Utilities is 1.86 times more volatile than Can Fin Homes. It trades about 0.08 of its potential returns per unit of risk. Can Fin Homes is currently generating about 0.01 per unit of risk. If you would invest  60,130  in BF Utilities Limited on September 20, 2024 and sell it today you would earn a total of  43,840  from holding BF Utilities Limited or generate 72.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.18%
Values	Daily Returns

BF Utilities Limited  vs.  Can Fin Homes

BF Utilities Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BF Utilities Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, BF Utilities demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Can Fin Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Can Fin Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with BF Utilities and Can Fin

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

The idea behind BF Utilities Limited and Can Fin Homes 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.