Correlation Between Manaksia Coated and BF Utilities

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

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

Diversification Opportunities for Manaksia Coated and BF Utilities

0.15

Correlation Coefficient

Manaksia Coated  BF Utilities

Average diversification

The 3 months correlation between Manaksia and BFUTILITIE is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Manaksia Coated Metals and BF Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BF Utilities Limited and Manaksia Coated 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 Manaksia Coated Metals are associated (or correlated) with BF Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BF Utilities Limited has no effect on the direction of Manaksia Coated i.e., Manaksia Coated and BF Utilities go up and down completely randomly.

Pair Corralation between Manaksia Coated and BF Utilities

Assuming the 90 days trading horizon Manaksia Coated Metals is expected to generate 0.93 times more return on investment than BF Utilities. However, Manaksia Coated Metals is 1.08 times less risky than BF Utilities. It trades about 0.17 of its potential returns per unit of risk. BF Utilities Limited is currently generating about 0.08 per unit of risk. If you would invest  2,923  in Manaksia Coated Metals on September 20, 2024 and sell it today you would earn a total of  7,820  from holding Manaksia Coated Metals or generate 267.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.18%
Values	Daily Returns

Manaksia Coated Metals  vs.  BF Utilities Limited

Manaksia Coated Metals

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manaksia Coated Metals are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Manaksia Coated displayed solid returns over the last few months and may actually be approaching a breakup point.

BF Utilities Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BF Utilities Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, BF Utilities demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manaksia Coated and BF Utilities

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

The idea behind Manaksia Coated Metals and BF Utilities 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.