Correlation Between Baazar Style and Industrial Investment

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

By analyzing existing cross correlation between Baazar Style Retail and Industrial Investment Trust, you can compare the effects of market volatilities on Baazar Style and Industrial 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 Baazar Style with a short position of Industrial Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baazar Style and Industrial Investment.

Diversification Opportunities for Baazar Style and Industrial Investment

-0.53

Correlation Coefficient

Baazar Style  Industrial Investment

Excellent diversification

The 3 months correlation between Baazar and Industrial is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Baazar Style Retail and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and Baazar Style 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 Baazar Style Retail are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of Baazar Style i.e., Baazar Style and Industrial Investment go up and down completely randomly.

Pair Corralation between Baazar Style and Industrial Investment

Assuming the 90 days trading horizon Baazar Style Retail is expected to under-perform the Industrial Investment. In addition to that, Baazar Style is 1.77 times more volatile than Industrial Investment Trust. It trades about -0.07 of its total potential returns per unit of risk. Industrial Investment Trust is currently generating about 0.33 per unit of volatility. If you would invest  26,375  in Industrial Investment Trust on August 31, 2024 and sell it today you would earn a total of  12,370  from holding Industrial Investment Trust or generate 46.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

Baazar Style Retail  vs.  Industrial Investment Trust

Baazar Style Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baazar Style Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Industrial Investment

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baazar Style and Industrial Investment

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

The idea behind Baazar Style Retail and Industrial Investment Trust 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.