Correlation Between Baazar Style and Aban Offshore

Can any of the company-specific risk be diversified away by investing in both Baazar Style and Aban Offshore 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 Baazar Style and Aban Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baazar Style Retail and Aban Offshore Limited, you can compare the effects of market volatilities on Baazar Style and Aban Offshore 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 Baazar Style with a short position of Aban Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baazar Style and Aban Offshore.

Diversification Opportunities for Baazar Style and Aban Offshore

0.88

Correlation Coefficient

Baazar Style  Aban Offshore

Very poor diversification

The 3 months correlation between Baazar and Aban is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Baazar Style Retail and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited and Baazar Style 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 Baazar Style Retail are associated (or correlated) with Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of Baazar Style i.e., Baazar Style and Aban Offshore go up and down completely randomly.

Pair Corralation between Baazar Style and Aban Offshore

Assuming the 90 days trading horizon Baazar Style Retail is expected to generate 1.35 times more return on investment than Aban Offshore. However, Baazar Style is 1.35 times more volatile than Aban Offshore Limited. It trades about -0.02 of its potential returns per unit of risk. Aban Offshore Limited is currently generating about -0.05 per unit of risk. If you would invest  36,265  in Baazar Style Retail on October 7, 2024 and sell it today you would lose (2,010) from holding Baazar Style Retail or give up 5.54% of portfolio value over 90 days.

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

Baazar Style Retail  vs.  Aban Offshore Limited

Baazar Style Retail

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aban Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aban Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Baazar Style and Aban Offshore

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

The idea behind Baazar Style Retail and Aban Offshore 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.