Correlation Between Generic Engineering and BAG Films

Can any of the company-specific risk be diversified away by investing in both Generic Engineering and BAG Films 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 Generic Engineering and BAG Films into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Generic Engineering Construction and BAG Films and, you can compare the effects of market volatilities on Generic Engineering and BAG Films 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 Generic Engineering with a short position of BAG Films. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Engineering and BAG Films.

Diversification Opportunities for Generic Engineering and BAG Films

0.58

Correlation Coefficient

Generic Engineering  BAG Films

Very weak diversification

The 3 months correlation between Generic and BAG is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi and BAG Films and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAG Films and Generic Engineering 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 Generic Engineering Construction are associated (or correlated) with BAG Films. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAG Films has no effect on the direction of Generic Engineering i.e., Generic Engineering and BAG Films go up and down completely randomly.

Pair Corralation between Generic Engineering and BAG Films

Assuming the 90 days trading horizon Generic Engineering Construction is expected to under-perform the BAG Films. But the stock apears to be less risky and, when comparing its historical volatility, Generic Engineering Construction is 1.19 times less risky than BAG Films. The stock trades about 0.0 of its potential returns per unit of risk. The BAG Films and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  495.00  in BAG Films and on October 4, 2024 and sell it today you would earn a total of  495.00  from holding BAG Films and or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Generic Engineering Constructi  vs.  BAG Films and

Generic Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generic Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Generic Engineering is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

BAG Films

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAG Films and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Generic Engineering and BAG Films

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

The idea behind Generic Engineering Construction and BAG Films and 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.