Correlation Between BF Investment and IOL Chemicals

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

Diversification Opportunities for BF Investment and IOL Chemicals

-0.19

Correlation Coefficient

BF Investment  IOL Chemicals

Good diversification

The 3 months correlation between BFINVEST and IOL is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BF Investment Limited and IOL Chemicals and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOL Chemicals 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 IOL Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOL Chemicals has no effect on the direction of BF Investment i.e., BF Investment and IOL Chemicals go up and down completely randomly.

Pair Corralation between BF Investment and IOL Chemicals

Assuming the 90 days trading horizon BF Investment Limited is expected to under-perform the IOL Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, BF Investment Limited is 1.67 times less risky than IOL Chemicals. The stock trades about -0.05 of its potential returns per unit of risk. The IOL Chemicals and is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  6,889  in IOL Chemicals and on April 24, 2025 and sell it today you would earn a total of  2,751  from holding IOL Chemicals and or generate 39.93% 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.  IOL Chemicals and

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

IOL Chemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IOL Chemicals and are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, IOL Chemicals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BF Investment and IOL Chemicals

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

The idea behind BF Investment Limited and IOL Chemicals and 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.