Correlation Between Bhiraj Office and Central Plaza

Can any of the company-specific risk be diversified away by investing in both Bhiraj Office and Central Plaza 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 Central Plaza 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 Central Plaza Hotel, you can compare the effects of market volatilities on Bhiraj Office and Central Plaza 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 Central Plaza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhiraj Office and Central Plaza.

Diversification Opportunities for Bhiraj Office and Central Plaza

0.66

Correlation Coefficient

Bhiraj Office  Central Plaza

Poor diversification

The 3 months correlation between Bhiraj and Central is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bhiraj Office Leasehold and Central Plaza Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plaza Hotel 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 Central Plaza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plaza Hotel has no effect on the direction of Bhiraj Office i.e., Bhiraj Office and Central Plaza go up and down completely randomly.

Pair Corralation between Bhiraj Office and Central Plaza

Assuming the 90 days trading horizon Bhiraj Office Leasehold is expected to generate 0.22 times more return on investment than Central Plaza. However, Bhiraj Office Leasehold is 4.47 times less risky than Central Plaza. It trades about -0.04 of its potential returns per unit of risk. Central Plaza Hotel is currently generating about -0.06 per unit of risk. If you would invest  492.00  in Bhiraj Office Leasehold on December 26, 2024 and sell it today you would lose (8.00) from holding Bhiraj Office Leasehold or give up 1.63% of portfolio value over 90 days.

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

Bhiraj Office Leasehold  vs.  Central Plaza Hotel

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.

Central Plaza Hotel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Plaza Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bhiraj Office and Central Plaza

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

The idea behind Bhiraj Office Leasehold and Central Plaza Hotel 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.