Correlation Between Baazar Style and Arrow Greentech

Can any of the company-specific risk be diversified away by investing in both Baazar Style and Arrow Greentech 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 Arrow Greentech 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 Arrow Greentech Limited, you can compare the effects of market volatilities on Baazar Style and Arrow Greentech 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 Arrow Greentech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baazar Style and Arrow Greentech.

Diversification Opportunities for Baazar Style and Arrow Greentech

-0.31

Correlation Coefficient

Baazar Style  Arrow Greentech

Very good diversification

The 3 months correlation between Baazar and Arrow is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Baazar Style Retail and Arrow Greentech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Greentech 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 Arrow Greentech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Greentech has no effect on the direction of Baazar Style i.e., Baazar Style and Arrow Greentech go up and down completely randomly.

Pair Corralation between Baazar Style and Arrow Greentech

Assuming the 90 days trading horizon Baazar Style Retail is expected to under-perform the Arrow Greentech. But the stock apears to be less risky and, when comparing its historical volatility, Baazar Style Retail is 1.17 times less risky than Arrow Greentech. The stock trades about -0.06 of its potential returns per unit of risk. The Arrow Greentech Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  34,305  in Arrow Greentech Limited on August 31, 2024 and sell it today you would earn a total of  49,495  from holding Arrow Greentech Limited or generate 144.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	16.12%
Values	Daily Returns

Baazar Style Retail  vs.  Arrow Greentech 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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Arrow Greentech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Greentech Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Arrow Greentech is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Baazar Style and Arrow Greentech

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

The idea behind Baazar Style Retail and Arrow Greentech 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.