Correlation Between Bhiraj Office and CHAOSUA FOODS

Can any of the company-specific risk be diversified away by investing in both Bhiraj Office and CHAOSUA FOODS 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 Bhiraj Office and CHAOSUA FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bhiraj Office Leasehold and CHAOSUA FOODS INDUSTRY, you can compare the effects of market volatilities on Bhiraj Office and CHAOSUA FOODS 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 Bhiraj Office with a short position of CHAOSUA FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhiraj Office and CHAOSUA FOODS.

Diversification Opportunities for Bhiraj Office and CHAOSUA FOODS

-0.52

Correlation Coefficient

Bhiraj Office  CHAOSUA FOODS

Excellent diversification

The 3 months correlation between Bhiraj and CHAOSUA is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bhiraj Office Leasehold and CHAOSUA FOODS INDUSTRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAOSUA FOODS INDUSTRY and Bhiraj Office 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 Bhiraj Office Leasehold are associated (or correlated) with CHAOSUA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAOSUA FOODS INDUSTRY has no effect on the direction of Bhiraj Office i.e., Bhiraj Office and CHAOSUA FOODS go up and down completely randomly.

Pair Corralation between Bhiraj Office and CHAOSUA FOODS

Assuming the 90 days trading horizon Bhiraj Office Leasehold is expected to generate 0.51 times more return on investment than CHAOSUA FOODS. However, Bhiraj Office Leasehold is 1.97 times less risky than CHAOSUA FOODS. It trades about 0.12 of its potential returns per unit of risk. CHAOSUA FOODS INDUSTRY is currently generating about -0.28 per unit of risk. If you would invest  476.00  in Bhiraj Office Leasehold on September 15, 2024 and sell it today you would earn a total of  49.00  from holding Bhiraj Office Leasehold or generate 10.29% return on investment over 90 days.

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

Bhiraj Office Leasehold  vs.  CHAOSUA FOODS INDUSTRY

Bhiraj Office Leasehold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bhiraj Office Leasehold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Bhiraj Office may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CHAOSUA FOODS INDUSTRY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAOSUA FOODS INDUSTRY 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bhiraj Office and CHAOSUA FOODS

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

The idea behind Bhiraj Office Leasehold and CHAOSUA FOODS INDUSTRY 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.