Correlation Between Techno Medical and BPS TECHNOLOGY

Can any of the company-specific risk be diversified away by investing in both Techno Medical and BPS TECHNOLOGY 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 Techno Medical and BPS TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Techno Medical Public and BPS TECHNOLOGY PUBLIC, you can compare the effects of market volatilities on Techno Medical and BPS TECHNOLOGY 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 Techno Medical with a short position of BPS TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techno Medical and BPS TECHNOLOGY.

Diversification Opportunities for Techno Medical and BPS TECHNOLOGY

0.91

Correlation Coefficient

Techno Medical  BPS TECHNOLOGY

Almost no diversification

The 3 months correlation between Techno and BPS is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Techno Medical Public and BPS TECHNOLOGY PUBLIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BPS TECHNOLOGY PUBLIC and Techno Medical 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 Techno Medical Public are associated (or correlated) with BPS TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BPS TECHNOLOGY PUBLIC has no effect on the direction of Techno Medical i.e., Techno Medical and BPS TECHNOLOGY go up and down completely randomly.

Pair Corralation between Techno Medical and BPS TECHNOLOGY

Assuming the 90 days horizon Techno Medical Public is expected to under-perform the BPS TECHNOLOGY. But the stock apears to be less risky and, when comparing its historical volatility, Techno Medical Public is 2.42 times less risky than BPS TECHNOLOGY. The stock trades about -0.44 of its potential returns per unit of risk. The BPS TECHNOLOGY PUBLIC is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  52.00  in BPS TECHNOLOGY PUBLIC on October 10, 2024 and sell it today you would lose (3.00) from holding BPS TECHNOLOGY PUBLIC or give up 5.77% of portfolio value over 90 days.

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

Techno Medical Public  vs.  BPS TECHNOLOGY PUBLIC

Techno Medical Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techno Medical Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

BPS TECHNOLOGY PUBLIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BPS TECHNOLOGY PUBLIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Techno Medical and BPS TECHNOLOGY

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

The idea behind Techno Medical Public and BPS TECHNOLOGY PUBLIC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.