Correlation Between BII Railway and FEMALE HEALTH

Can any of the company-specific risk be diversified away by investing in both BII Railway and FEMALE HEALTH 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 BII Railway and FEMALE HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BII Railway Transportation and FEMALE HEALTH, you can compare the effects of market volatilities on BII Railway and FEMALE HEALTH 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 BII Railway with a short position of FEMALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and FEMALE HEALTH.

Diversification Opportunities for BII Railway and FEMALE HEALTH

0.33

Correlation Coefficient

BII Railway  FEMALE HEALTH

Weak diversification

The 3 months correlation between BII and FEMALE is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH and BII Railway 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 BII Railway Transportation are associated (or correlated) with FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of BII Railway i.e., BII Railway and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between BII Railway and FEMALE HEALTH

Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the FEMALE HEALTH. But the stock apears to be less risky and, when comparing its historical volatility, BII Railway Transportation is 1.43 times less risky than FEMALE HEALTH. The stock trades about -0.02 of its potential returns per unit of risk. The FEMALE HEALTH is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  73.00  in FEMALE HEALTH on September 25, 2024 and sell it today you would lose (11.00) from holding FEMALE HEALTH or give up 15.07% of portfolio value over 90 days.

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

BII Railway Transportation  vs.  FEMALE HEALTH

BII Railway Transpor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BII Railway Transportation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BII Railway may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BII Railway and FEMALE HEALTH

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

The idea behind BII Railway Transportation and FEMALE HEALTH 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 Stocks Directory module to find actively traded stocks across global markets.