Correlation Between Bhiraj Office and Business Online

Can any of the company-specific risk be diversified away by investing in both Bhiraj Office and Business Online 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 Bhiraj Office and Business Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bhiraj Office Leasehold and Business Online PCL, you can compare the effects of market volatilities on Bhiraj Office and Business Online 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 Bhiraj Office with a short position of Business Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhiraj Office and Business Online.

Diversification Opportunities for Bhiraj Office and Business Online

0.5

Correlation Coefficient

Bhiraj Office  Business Online

Very weak diversification

The 3 months correlation between Bhiraj and Business is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bhiraj Office Leasehold and Business Online PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business Online PCL and Bhiraj Office 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 Bhiraj Office Leasehold are associated (or correlated) with Business Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business Online PCL has no effect on the direction of Bhiraj Office i.e., Bhiraj Office and Business Online go up and down completely randomly.

Pair Corralation between Bhiraj Office and Business Online

Assuming the 90 days trading horizon Bhiraj Office Leasehold is expected to under-perform the Business Online. But the stock apears to be less risky and, when comparing its historical volatility, Bhiraj Office Leasehold is 3.55 times less risky than Business Online. The stock trades about -0.1 of its potential returns per unit of risk. The Business Online PCL is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Business Online PCL on December 2, 2024 and sell it today you would lose (20.00) from holding Business Online PCL or give up 3.77% of portfolio value over 90 days.

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

Bhiraj Office Leasehold  vs.  Business Online PCL

Bhiraj Office Leasehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bhiraj Office Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bhiraj Office is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Business Online PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Business Online PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Business Online is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bhiraj Office and Business Online

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

The idea behind Bhiraj Office Leasehold and Business Online PCL 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.