Correlation Between BF Investment and GVP Infotech

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

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

Diversification Opportunities for BF Investment and GVP Infotech

-0.08

Correlation Coefficient

BF Investment  GVP Infotech

Good diversification

The 3 months correlation between BFINVEST and GVP is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding BF Investment Limited and GVP Infotech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GVP Infotech Limited and BF Investment 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 BF Investment Limited are associated (or correlated) with GVP Infotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GVP Infotech Limited has no effect on the direction of BF Investment i.e., BF Investment and GVP Infotech go up and down completely randomly.

Pair Corralation between BF Investment and GVP Infotech

Assuming the 90 days trading horizon BF Investment Limited is expected to under-perform the GVP Infotech. But the stock apears to be less risky and, when comparing its historical volatility, BF Investment Limited is 1.69 times less risky than GVP Infotech. The stock trades about -0.06 of its potential returns per unit of risk. The GVP Infotech Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,022  in GVP Infotech Limited on April 20, 2025 and sell it today you would earn a total of  23.00  from holding GVP Infotech Limited or generate 2.25% return on investment over 90 days.

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

BF Investment Limited  vs.  GVP Infotech Limited

BF Investment Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days BF Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BF Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

GVP Infotech Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GVP Infotech Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, GVP Infotech is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BF Investment and GVP Infotech

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

The idea behind BF Investment Limited and GVP Infotech 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.