Correlation Between Silly Monks and BF Investment

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

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

Diversification Opportunities for Silly Monks and BF Investment

-0.34

Correlation Coefficient

Silly Monks  BF Investment

Very good diversification

The 3 months correlation between Silly and BFINVEST is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Silly Monks Entertainment 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 Silly Monks 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 Silly Monks Entertainment 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 Silly Monks i.e., Silly Monks and BF Investment go up and down completely randomly.

Pair Corralation between Silly Monks and BF Investment

Assuming the 90 days trading horizon Silly Monks is expected to generate 1.43 times less return on investment than BF Investment. In addition to that, Silly Monks is 1.13 times more volatile than BF Investment Limited. It trades about 0.04 of its total potential returns per unit of risk. BF Investment Limited is currently generating about 0.06 per unit of volatility. If you would invest  38,965  in BF Investment Limited on October 5, 2024 and sell it today you would earn a total of  29,595  from holding BF Investment Limited or generate 75.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.55%
Values	Daily Returns

Silly Monks Entertainment  vs.  BF Investment Limited

Silly Monks Entertainment

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silly Monks Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Silly Monks displayed solid returns over the last few months and may actually be approaching a breakup point.

BF Investment Limited

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BF Investment Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating 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 Silly Monks and BF Investment

The main advantage of trading using opposite Silly Monks and BF Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silly Monks 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 Silly Monks Entertainment 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.