Correlation Between BF Utilities and EMBASSY OFFICE

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

Diversification Opportunities for BF Utilities and EMBASSY OFFICE

-0.33

Correlation Coefficient

BF Utilities  EMBASSY OFFICE

Very good diversification

The 3 months correlation between BFUTILITIE and EMBASSY is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BF Utilities Limited and EMBASSY OFFICE PARKS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBASSY OFFICE PARKS 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 EMBASSY OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBASSY OFFICE PARKS has no effect on the direction of BF Utilities i.e., BF Utilities and EMBASSY OFFICE go up and down completely randomly.

Pair Corralation between BF Utilities and EMBASSY OFFICE

Assuming the 90 days trading horizon BF Utilities Limited is expected to generate 2.19 times more return on investment than EMBASSY OFFICE. However, BF Utilities is 2.19 times more volatile than EMBASSY OFFICE PARKS. It trades about 0.07 of its potential returns per unit of risk. EMBASSY OFFICE PARKS is currently generating about 0.05 per unit of risk. If you would invest  35,145  in BF Utilities Limited on October 26, 2024 and sell it today you would earn a total of  47,350  from holding BF Utilities Limited or generate 134.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.25%
Values	Daily Returns

BF Utilities Limited  vs.  EMBASSY OFFICE PARKS

BF Utilities Limited

Risk-Adjusted Performance

0 of 100

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 current stock price confusion, may contribute to short-horizon losses for the traders.

EMBASSY OFFICE PARKS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMBASSY OFFICE PARKS 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BF Utilities and EMBASSY OFFICE

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

The idea behind BF Utilities Limited and EMBASSY OFFICE PARKS 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.