Correlation Between BH Macro and Foresight Environmental

Can any of the company-specific risk be diversified away by investing in both BH Macro and Foresight Environmental 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 BH Macro and Foresight Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BH Macro Limited and Foresight Environmental Infrastructure, you can compare the effects of market volatilities on BH Macro and Foresight Environmental 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 BH Macro with a short position of Foresight Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of BH Macro and Foresight Environmental.

Diversification Opportunities for BH Macro and Foresight Environmental

-0.15

Correlation Coefficient

BH Macro  Foresight Environmental

Good diversification

The 3 months correlation between BHMU and Foresight is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding BH Macro Limited and Foresight Environmental Infras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Environmental and BH Macro 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 BH Macro Limited are associated (or correlated) with Foresight Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Environmental has no effect on the direction of BH Macro i.e., BH Macro and Foresight Environmental go up and down completely randomly.

Pair Corralation between BH Macro and Foresight Environmental

Assuming the 90 days trading horizon BH Macro is expected to generate 99.3 times less return on investment than Foresight Environmental. But when comparing it to its historical volatility, BH Macro Limited is 1.29 times less risky than Foresight Environmental. It trades about 0.0 of its potential returns per unit of risk. Foresight Environmental Infrastructure is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  7,670  in Foresight Environmental Infrastructure on April 11, 2025 and sell it today you would earn a total of  510.00  from holding Foresight Environmental Infrastructure or generate 6.65% return on investment over 90 days.

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

BH Macro Limited  vs.  Foresight Environmental Infras

BH Macro Limited

Risk-Adjusted Performance

Very Weak

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

Foresight Environmental

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Foresight Environmental Infrastructure are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Foresight Environmental unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BH Macro and Foresight Environmental

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

The idea behind BH Macro Limited and Foresight Environmental Infrastructure 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.