Correlation Between Baazar Style and Reliance Home

Can any of the company-specific risk be diversified away by investing in both Baazar Style and Reliance Home 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 Reliance Home 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 Reliance Home Finance, you can compare the effects of market volatilities on Baazar Style and Reliance Home 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 Reliance Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baazar Style and Reliance Home.

Diversification Opportunities for Baazar Style and Reliance Home

0.6

Correlation Coefficient

Baazar Style  Reliance Home

Poor diversification

The 3 months correlation between Baazar and Reliance is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Baazar Style Retail and Reliance Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Home Finance 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 Reliance Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Home Finance has no effect on the direction of Baazar Style i.e., Baazar Style and Reliance Home go up and down completely randomly.

Pair Corralation between Baazar Style and Reliance Home

Assuming the 90 days trading horizon Baazar Style Retail is expected to generate 0.9 times more return on investment than Reliance Home. However, Baazar Style Retail is 1.11 times less risky than Reliance Home. It trades about -0.06 of its potential returns per unit of risk. Reliance Home Finance is currently generating about -0.13 per unit of risk. If you would invest  40,000  in Baazar Style Retail on September 2, 2024 and sell it today you would lose (5,410) from holding Baazar Style Retail or give up 13.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

Baazar Style Retail  vs.  Reliance Home Finance

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Reliance Home Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reliance Home Finance 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 Baazar Style and Reliance Home

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

The idea behind Baazar Style Retail and Reliance Home Finance 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.