Correlation Between Bigbloc Construction and Country Club

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

Diversification Opportunities for Bigbloc Construction and Country Club

0.92

Correlation Coefficient

Bigbloc Construction  Country Club

Almost no diversification

The 3 months correlation between Bigbloc and Country is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bigbloc Construction Limited and Country Club Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Club Hospitality 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 Country Club. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Club Hospitality has no effect on the direction of Bigbloc Construction i.e., Bigbloc Construction and Country Club go up and down completely randomly.

Pair Corralation between Bigbloc Construction and Country Club

Assuming the 90 days trading horizon Bigbloc Construction Limited is expected to generate 1.22 times more return on investment than Country Club. However, Bigbloc Construction is 1.22 times more volatile than Country Club Hospitality. It trades about -0.24 of its potential returns per unit of risk. Country Club Hospitality is currently generating about -0.38 per unit of risk. If you would invest  8,211  in Bigbloc Construction Limited on December 1, 2024 and sell it today you would lose (1,768) from holding Bigbloc Construction Limited or give up 21.53% of portfolio value over 90 days.

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

Bigbloc Construction Limited  vs.  Country Club Hospitality

Bigbloc Construction

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Country Club Hospitality

Risk-Adjusted Performance

Very Weak

Over the last 90 days Country Club Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bigbloc Construction and Country Club

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

The idea behind Bigbloc Construction Limited and Country Club Hospitality 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.