Correlation Between Bharti Airtel and Oil Natural

Can any of the company-specific risk be diversified away by investing in both Bharti Airtel and Oil Natural 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 Bharti Airtel and Oil Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bharti Airtel Limited and Oil Natural Gas, you can compare the effects of market volatilities on Bharti Airtel and Oil Natural 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 Bharti Airtel with a short position of Oil Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharti Airtel and Oil Natural.

Diversification Opportunities for Bharti Airtel and Oil Natural

0.22

Correlation Coefficient

Bharti Airtel  Oil Natural

Modest diversification

The 3 months correlation between Bharti and Oil is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bharti Airtel Limited and Oil Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Natural Gas and Bharti Airtel 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 Bharti Airtel Limited are associated (or correlated) with Oil Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Natural Gas has no effect on the direction of Bharti Airtel i.e., Bharti Airtel and Oil Natural go up and down completely randomly.

Pair Corralation between Bharti Airtel and Oil Natural

Assuming the 90 days trading horizon Bharti Airtel Limited is expected to generate 0.82 times more return on investment than Oil Natural. However, Bharti Airtel Limited is 1.21 times less risky than Oil Natural. It trades about 0.06 of its potential returns per unit of risk. Oil Natural Gas is currently generating about -0.19 per unit of risk. If you would invest  156,060  in Bharti Airtel Limited on September 3, 2024 and sell it today you would earn a total of  6,655  from holding Bharti Airtel Limited or generate 4.26% return on investment over 90 days.

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

Bharti Airtel Limited  vs.  Oil Natural Gas

Bharti Airtel Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bharti Airtel Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bharti Airtel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Oil Natural Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bharti Airtel and Oil Natural

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

The idea behind Bharti Airtel Limited and Oil Natural Gas 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.