Correlation Between Bhiraj Office and Sahamit Machinery

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

Diversification Opportunities for Bhiraj Office and Sahamit Machinery

-0.45

Correlation Coefficient

Bhiraj Office  Sahamit Machinery

Very good diversification

The 3 months correlation between Bhiraj and Sahamit is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bhiraj Office Leasehold and Sahamit Machinery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sahamit Machinery Public 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 Sahamit Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sahamit Machinery Public has no effect on the direction of Bhiraj Office i.e., Bhiraj Office and Sahamit Machinery go up and down completely randomly.

Pair Corralation between Bhiraj Office and Sahamit Machinery

Assuming the 90 days trading horizon Bhiraj Office is expected to generate 67.56 times less return on investment than Sahamit Machinery. But when comparing it to its historical volatility, Bhiraj Office Leasehold is 55.09 times less risky than Sahamit Machinery. It trades about 0.05 of its potential returns per unit of risk. Sahamit Machinery Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  432.00  in Sahamit Machinery Public on September 24, 2024 and sell it today you would lose (36.00) from holding Sahamit Machinery Public or give up 8.33% of portfolio value over 90 days.

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

Bhiraj Office Leasehold  vs.  Sahamit Machinery Public

Bhiraj Office Leasehold

Risk-Adjusted Performance

0 of 100

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.

Sahamit Machinery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sahamit Machinery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sahamit Machinery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bhiraj Office and Sahamit Machinery

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

The idea behind Bhiraj Office Leasehold and Sahamit Machinery Public 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.