Correlation Between Bigbloc Construction and BF Utilities

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

Diversification Opportunities for Bigbloc Construction and BF Utilities

-0.05

Correlation Coefficient

Bigbloc Construction  BF Utilities

Good diversification

The 3 months correlation between Bigbloc and BFUTILITIE is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bigbloc Construction Limited and BF Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BF Utilities Limited 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 BF Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BF Utilities Limited has no effect on the direction of Bigbloc Construction i.e., Bigbloc Construction and BF Utilities go up and down completely randomly.

Pair Corralation between Bigbloc Construction and BF Utilities

Assuming the 90 days trading horizon Bigbloc Construction Limited is expected to under-perform the BF Utilities. In addition to that, Bigbloc Construction is 1.14 times more volatile than BF Utilities Limited. It trades about 0.0 of its total potential returns per unit of risk. BF Utilities Limited is currently generating about 0.04 per unit of volatility. If you would invest  92,405  in BF Utilities Limited on October 5, 2024 and sell it today you would earn a total of  4,675  from holding BF Utilities Limited or generate 5.06% return on investment over 90 days.

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

Bigbloc Construction Limited  vs.  BF Utilities Limited

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.

BF Utilities Limited

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BF Utilities Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, BF Utilities may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bigbloc Construction and BF Utilities

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

The idea behind Bigbloc Construction Limited and BF Utilities 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.