Correlation Between Bharatiya Global and Tata Consultancy

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

Diversification Opportunities for Bharatiya Global and Tata Consultancy

0.07

Correlation Coefficient

Bharatiya Global  Tata Consultancy

Significant diversification

The 3 months correlation between Bharatiya and Tata is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bharatiya Global Infomedia and Tata Consultancy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Consultancy Services 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 Tata Consultancy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Consultancy Services has no effect on the direction of Bharatiya Global i.e., Bharatiya Global and Tata Consultancy go up and down completely randomly.

Pair Corralation between Bharatiya Global and Tata Consultancy

Assuming the 90 days trading horizon Bharatiya Global Infomedia is expected to generate 1.35 times more return on investment than Tata Consultancy. However, Bharatiya Global is 1.35 times more volatile than Tata Consultancy Services. It trades about 0.08 of its potential returns per unit of risk. Tata Consultancy Services is currently generating about 0.04 per unit of risk. If you would invest  280.00  in Bharatiya Global Infomedia on October 26, 2024 and sell it today you would earn a total of  213.00  from holding Bharatiya Global Infomedia or generate 76.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.18%
Values	Daily Returns

Bharatiya Global Infomedia  vs.  Tata Consultancy Services

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 weak fundamental drivers, Bharatiya Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

Tata Consultancy Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tata Consultancy Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Tata Consultancy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bharatiya Global and Tata Consultancy

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

The idea behind Bharatiya Global Infomedia and Tata Consultancy Services 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.