Correlation Between Hisar Metal and Bkm Industries

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

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

Diversification Opportunities for Hisar Metal and Bkm Industries

-0.02

Correlation Coefficient

Hisar Metal  Bkm Industries

Good diversification

The 3 months correlation between Hisar and Bkm is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and Bkm Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bkm Industries and Hisar Metal 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 Hisar Metal Industries are associated (or correlated) with Bkm Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bkm Industries has no effect on the direction of Hisar Metal i.e., Hisar Metal and Bkm Industries go up and down completely randomly.

Pair Corralation between Hisar Metal and Bkm Industries

Assuming the 90 days trading horizon Hisar Metal is expected to generate 163.58 times less return on investment than Bkm Industries. But when comparing it to its historical volatility, Hisar Metal Industries is 48.08 times less risky than Bkm Industries. It trades about 0.04 of its potential returns per unit of risk. Bkm Industries Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  164.00  in Bkm Industries Limited on September 24, 2024 and sell it today you would earn a total of  4,336  from holding Bkm Industries Limited or generate 2643.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Hisar Metal Industries  vs.  Bkm Industries Limited

Hisar Metal Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hisar Metal is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bkm Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bkm Industries Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Bkm Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hisar Metal and Bkm Industries

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

The idea behind Hisar Metal Industries and Bkm Industries 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.