Correlation Between Bharatiya Global and REC

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

Diversification Opportunities for Bharatiya Global and REC

0.62

Correlation Coefficient

Bharatiya Global  REC

Poor diversification

The 3 months correlation between Bharatiya and REC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bharatiya Global Infomedia and REC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REC Limited 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 REC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REC Limited has no effect on the direction of Bharatiya Global i.e., Bharatiya Global and REC go up and down completely randomly.

Pair Corralation between Bharatiya Global and REC

Assuming the 90 days trading horizon Bharatiya Global Infomedia is expected to under-perform the REC. But the stock apears to be less risky and, when comparing its historical volatility, Bharatiya Global Infomedia is 1.35 times less risky than REC. The stock trades about -0.19 of its potential returns per unit of risk. The REC Limited is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  50,207  in REC Limited on December 25, 2024 and sell it today you would lose (5,762) from holding REC Limited or give up 11.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Bharatiya Global Infomedia  vs.  REC Limited

Bharatiya Global Inf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bharatiya Global Infomedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

REC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days REC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential 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 Bharatiya Global and REC

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

The idea behind Bharatiya Global Infomedia and REC 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.