Correlation Between BF Utilities and Shivalik Bimetal

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

Diversification Opportunities for BF Utilities and Shivalik Bimetal

0.25

Correlation Coefficient

BF Utilities  Shivalik Bimetal

Modest diversification

The 3 months correlation between BFUTILITIE and Shivalik is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BF Utilities Limited and Shivalik Bimetal Controls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shivalik Bimetal Controls 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 Shivalik Bimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shivalik Bimetal Controls has no effect on the direction of BF Utilities i.e., BF Utilities and Shivalik Bimetal go up and down completely randomly.

Pair Corralation between BF Utilities and Shivalik Bimetal

Assuming the 90 days trading horizon BF Utilities Limited is expected to generate 1.3 times more return on investment than Shivalik Bimetal. However, BF Utilities is 1.3 times more volatile than Shivalik Bimetal Controls. It trades about 0.04 of its potential returns per unit of risk. Shivalik Bimetal Controls is currently generating about -0.05 per unit of risk. If you would invest  77,800  in BF Utilities Limited on October 20, 2024 and sell it today you would earn a total of  6,875  from holding BF Utilities Limited or generate 8.84% return on investment over 90 days.

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

BF Utilities Limited  vs.  Shivalik Bimetal Controls

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 latest inconsistent 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.

Shivalik Bimetal Controls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shivalik Bimetal Controls has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BF Utilities and Shivalik Bimetal

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

The idea behind BF Utilities Limited and Shivalik Bimetal Controls 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.