Correlation Between Bigbloc Construction and Hindcon Chemicals

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

Diversification Opportunities for Bigbloc Construction and Hindcon Chemicals

0.55

Correlation Coefficient

Bigbloc Construction  Hindcon Chemicals

Very weak diversification

The 3 months correlation between Bigbloc and Hindcon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bigbloc Construction Limited and Hindcon Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindcon Chemicals 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 Hindcon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindcon Chemicals has no effect on the direction of Bigbloc Construction i.e., Bigbloc Construction and Hindcon Chemicals go up and down completely randomly.

Pair Corralation between Bigbloc Construction and Hindcon Chemicals

Assuming the 90 days trading horizon Bigbloc Construction Limited is expected to under-perform the Hindcon Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Bigbloc Construction Limited is 1.11 times less risky than Hindcon Chemicals. The stock trades about -0.05 of its potential returns per unit of risk. The Hindcon Chemicals Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,202  in Hindcon Chemicals Limited on September 3, 2024 and sell it today you would earn a total of  381.00  from holding Hindcon Chemicals Limited or generate 7.32% return on investment over 90 days.

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

Bigbloc Construction Limited  vs.  Hindcon Chemicals 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 latest unsteady performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Hindcon Chemicals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hindcon Chemicals Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Hindcon Chemicals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bigbloc Construction and Hindcon Chemicals

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

The idea behind Bigbloc Construction Limited and Hindcon Chemicals 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.