Correlation Between POWERGRID Infrastructure and Barbeque Nation

Can any of the company-specific risk be diversified away by investing in both POWERGRID Infrastructure and Barbeque Nation 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 POWERGRID Infrastructure and Barbeque Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between POWERGRID Infrastructure Investment and Barbeque Nation Hospitality, you can compare the effects of market volatilities on POWERGRID Infrastructure and Barbeque Nation 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 POWERGRID Infrastructure with a short position of Barbeque Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWERGRID Infrastructure and Barbeque Nation.

Diversification Opportunities for POWERGRID Infrastructure and Barbeque Nation

0.49

Correlation Coefficient

POWERGRID Infrastructure  Barbeque Nation

Very weak diversification

The 3 months correlation between POWERGRID and Barbeque is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding POWERGRID Infrastructure Inves and Barbeque Nation Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barbeque Nation Hosp and POWERGRID Infrastructure 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 POWERGRID Infrastructure Investment are associated (or correlated) with Barbeque Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barbeque Nation Hosp has no effect on the direction of POWERGRID Infrastructure i.e., POWERGRID Infrastructure and Barbeque Nation go up and down completely randomly.

Pair Corralation between POWERGRID Infrastructure and Barbeque Nation

Assuming the 90 days trading horizon POWERGRID Infrastructure Investment is expected to generate 0.25 times more return on investment than Barbeque Nation. However, POWERGRID Infrastructure Investment is 4.02 times less risky than Barbeque Nation. It trades about -0.07 of its potential returns per unit of risk. Barbeque Nation Hospitality is currently generating about -0.21 per unit of risk. If you would invest  8,598  in POWERGRID Infrastructure Investment on September 26, 2024 and sell it today you would lose (50.00) from holding POWERGRID Infrastructure Investment or give up 0.58% of portfolio value over 90 days.

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

POWERGRID Infrastructure Inves  vs.  Barbeque Nation Hospitality

POWERGRID Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POWERGRID Infrastructure Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, POWERGRID Infrastructure is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Barbeque Nation Hosp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barbeque Nation Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with POWERGRID Infrastructure and Barbeque Nation

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

The idea behind POWERGRID Infrastructure Investment and Barbeque Nation Hospitality 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.