Correlation Between BF Utilities and Manaksia Coated

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

Diversification Opportunities for BF Utilities and Manaksia Coated

0.15

Correlation Coefficient

BF Utilities  Manaksia Coated

Average diversification

The 3 months correlation between BFUTILITIE and Manaksia is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding BF Utilities Limited and Manaksia Coated Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaksia Coated Metals 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 Manaksia Coated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaksia Coated Metals has no effect on the direction of BF Utilities i.e., BF Utilities and Manaksia Coated go up and down completely randomly.

Pair Corralation between BF Utilities and Manaksia Coated

Assuming the 90 days trading horizon BF Utilities is expected to generate 1.66 times less return on investment than Manaksia Coated. But when comparing it to its historical volatility, BF Utilities Limited is 1.03 times less risky than Manaksia Coated. It trades about 0.08 of its potential returns per unit of risk. Manaksia Coated Metals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,796  in Manaksia Coated Metals on September 20, 2024 and sell it today you would earn a total of  8,947  from holding Manaksia Coated Metals or generate 498.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

BF Utilities Limited  vs.  Manaksia Coated Metals

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.

Manaksia Coated Metals

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manaksia Coated Metals are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Manaksia Coated displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BF Utilities and Manaksia Coated

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

The idea behind BF Utilities Limited and Manaksia Coated Metals 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.