Correlation Between BSA and Rural Funds

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

By analyzing existing cross correlation between BSA and Rural Funds Group, you can compare the effects of market volatilities on BSA and Rural Funds 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 BSA with a short position of Rural Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSA and Rural Funds.

Diversification Opportunities for BSA and Rural Funds

-0.2

Correlation Coefficient

BSA  Rural Funds

Good diversification

The 3 months correlation between BSA and Rural is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BSA and Rural Funds Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rural Funds Group and BSA 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 BSA are associated (or correlated) with Rural Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rural Funds Group has no effect on the direction of BSA i.e., BSA and Rural Funds go up and down completely randomly.

Pair Corralation between BSA and Rural Funds

Assuming the 90 days trading horizon BSA is expected to generate 3.04 times more return on investment than Rural Funds. However, BSA is 3.04 times more volatile than Rural Funds Group. It trades about 0.04 of its potential returns per unit of risk. Rural Funds Group is currently generating about -0.21 per unit of risk. If you would invest  95.00  in BSA on September 26, 2024 and sell it today you would earn a total of  4.00  from holding BSA or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

BSA  vs.  Rural Funds Group

BSA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BSA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BSA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rural Funds Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rural Funds Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BSA and Rural Funds

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

The idea behind BSA and Rural Funds Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.