Correlation Between Bharatiya Global and Nazara Technologies

Can any of the company-specific risk be diversified away by investing in both Bharatiya Global and Nazara Technologies 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 Bharatiya Global and Nazara Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bharatiya Global Infomedia and Nazara Technologies Limited, you can compare the effects of market volatilities on Bharatiya Global and Nazara Technologies 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 Bharatiya Global with a short position of Nazara Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharatiya Global and Nazara Technologies.

Diversification Opportunities for Bharatiya Global and Nazara Technologies

0.6

Correlation Coefficient

Bharatiya Global  Nazara Technologies

Poor diversification

The 3 months correlation between Bharatiya and Nazara is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bharatiya Global Infomedia and Nazara Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nazara Technologies and Bharatiya Global 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 Bharatiya Global Infomedia are associated (or correlated) with Nazara Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nazara Technologies has no effect on the direction of Bharatiya Global i.e., Bharatiya Global and Nazara Technologies go up and down completely randomly.

Pair Corralation between Bharatiya Global and Nazara Technologies

Assuming the 90 days trading horizon Bharatiya Global Infomedia is expected to generate 0.71 times more return on investment than Nazara Technologies. However, Bharatiya Global Infomedia is 1.42 times less risky than Nazara Technologies. It trades about 0.08 of its potential returns per unit of risk. Nazara Technologies Limited is currently generating about 0.05 per unit of risk. If you would invest  285.00  in Bharatiya Global Infomedia on October 17, 2024 and sell it today you would earn a total of  233.00  from holding Bharatiya Global Infomedia or generate 81.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.38%
Values	Daily Returns

Bharatiya Global Infomedia  vs.  Nazara Technologies Limited

Bharatiya Global Inf

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bharatiya Global Infomedia are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Bharatiya Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nazara Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nazara Technologies Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nazara Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bharatiya Global and Nazara Technologies

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

The idea behind Bharatiya Global Infomedia and Nazara Technologies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .