Correlation Between Bigbloc Construction and Automotive Stampings

Can any of the company-specific risk be diversified away by investing in both Bigbloc Construction and Automotive Stampings 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 Bigbloc Construction and Automotive Stampings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bigbloc Construction Limited and Automotive Stampings and, you can compare the effects of market volatilities on Bigbloc Construction and Automotive Stampings 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 Bigbloc Construction with a short position of Automotive Stampings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bigbloc Construction and Automotive Stampings.

Diversification Opportunities for Bigbloc Construction and Automotive Stampings

0.32

Correlation Coefficient

Bigbloc Construction  Automotive Stampings

Weak diversification

The 3 months correlation between Bigbloc and Automotive is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bigbloc Construction Limited and Automotive Stampings and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Stampings and and Bigbloc Construction 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 Bigbloc Construction Limited are associated (or correlated) with Automotive Stampings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Stampings and has no effect on the direction of Bigbloc Construction i.e., Bigbloc Construction and Automotive Stampings go up and down completely randomly.

Pair Corralation between Bigbloc Construction and Automotive Stampings

Assuming the 90 days trading horizon Bigbloc Construction Limited is expected to generate 1.29 times more return on investment than Automotive Stampings. However, Bigbloc Construction is 1.29 times more volatile than Automotive Stampings and. It trades about -0.01 of its potential returns per unit of risk. Automotive Stampings and is currently generating about -0.01 per unit of risk. If you would invest  10,881  in Bigbloc Construction Limited on October 7, 2024 and sell it today you would lose (531.00) from holding Bigbloc Construction Limited or give up 4.88% of portfolio value over 90 days.

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

Bigbloc Construction Limited  vs.  Automotive Stampings and

Bigbloc Construction

Risk-Adjusted Performance

0 of 100

Very Weak

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

Automotive Stampings and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automotive Stampings and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Automotive Stampings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bigbloc Construction and Automotive Stampings

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

The idea behind Bigbloc Construction Limited and Automotive Stampings and 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.