Correlation Between Indian Card and BF Investment

Can any of the company-specific risk be diversified away by investing in both Indian Card and BF Investment 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 Indian Card and BF Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indian Card Clothing and BF Investment Limited, you can compare the effects of market volatilities on Indian Card and BF Investment 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 Indian Card with a short position of BF Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Card and BF Investment.

Diversification Opportunities for Indian Card and BF Investment

0.18

Correlation Coefficient

Indian Card  BF Investment

Average diversification

The 3 months correlation between Indian and BFINVEST is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Indian Card Clothing and BF Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BF Investment Limited and Indian Card 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 Indian Card Clothing are associated (or correlated) with BF Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BF Investment Limited has no effect on the direction of Indian Card i.e., Indian Card and BF Investment go up and down completely randomly.

Pair Corralation between Indian Card and BF Investment

Assuming the 90 days trading horizon Indian Card is expected to generate 1.33 times less return on investment than BF Investment. But when comparing it to its historical volatility, Indian Card Clothing is 1.2 times less risky than BF Investment. It trades about 0.07 of its potential returns per unit of risk. BF Investment Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  31,580  in BF Investment Limited on September 19, 2024 and sell it today you would earn a total of  42,350  from holding BF Investment Limited or generate 134.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.57%
Values	Daily Returns

Indian Card Clothing  vs.  BF Investment Limited

Indian Card Clothing

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Card Clothing are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Indian Card exhibited solid returns over the last few months and may actually be approaching a breakup point.

BF Investment Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BF Investment Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, BF Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indian Card and BF Investment

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

The idea behind Indian Card Clothing and BF Investment Limited 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.