Correlation Between Bharatiya Global and Piramal Enterprises

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

Diversification Opportunities for Bharatiya Global and Piramal Enterprises

-0.06

Correlation Coefficient

Bharatiya Global  Piramal Enterprises

Good diversification

The 3 months correlation between Bharatiya and Piramal is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bharatiya Global Infomedia and Piramal Enterprises Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piramal Enterprises 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 Piramal Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piramal Enterprises has no effect on the direction of Bharatiya Global i.e., Bharatiya Global and Piramal Enterprises go up and down completely randomly.

Pair Corralation between Bharatiya Global and Piramal Enterprises

Assuming the 90 days trading horizon Bharatiya Global Infomedia is expected to generate 0.85 times more return on investment than Piramal Enterprises. However, Bharatiya Global Infomedia is 1.18 times less risky than Piramal Enterprises. It trades about 0.4 of its potential returns per unit of risk. Piramal Enterprises Limited is currently generating about -0.02 per unit of risk. If you would invest  306.00  in Bharatiya Global Infomedia on October 24, 2024 and sell it today you would earn a total of  187.00  from holding Bharatiya Global Infomedia or generate 61.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bharatiya Global Infomedia  vs.  Piramal Enterprises Limited

Bharatiya Global Inf

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bharatiya Global Infomedia are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental drivers, Bharatiya Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

Piramal Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piramal Enterprises Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Piramal Enterprises is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bharatiya Global and Piramal Enterprises

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

The idea behind Bharatiya Global Infomedia and Piramal Enterprises 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.