Correlation Between Welspun Investments and BF Investment

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

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

Diversification Opportunities for Welspun Investments and BF Investment

-0.46

Correlation Coefficient

Welspun Investments  BF Investment

Very good diversification

The 3 months correlation between Welspun and BFINVEST is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Welspun Investments and 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 Welspun Investments 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 Welspun Investments and 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 Welspun Investments i.e., Welspun Investments and BF Investment go up and down completely randomly.

Pair Corralation between Welspun Investments and BF Investment

Assuming the 90 days trading horizon Welspun Investments and is expected to generate 1.01 times more return on investment than BF Investment. However, Welspun Investments is 1.01 times more volatile than BF Investment Limited. It trades about 0.09 of its potential returns per unit of risk. BF Investment Limited is currently generating about 0.07 per unit of risk. If you would invest  38,500  in Welspun Investments and on October 4, 2024 and sell it today you would earn a total of  51,540  from holding Welspun Investments and or generate 133.87% return on investment over 90 days.

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

Welspun Investments and  vs.  BF Investment Limited

Welspun Investments and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Welspun Investments and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BF Investment Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BF Investment Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, BF Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Welspun Investments and BF Investment

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