Correlation Between Bharat Road and ZF Commercial

Can any of the company-specific risk be diversified away by investing in both Bharat Road and ZF Commercial 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 Bharat Road and ZF Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bharat Road Network and ZF Commercial Vehicle, you can compare the effects of market volatilities on Bharat Road and ZF Commercial 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 Bharat Road with a short position of ZF Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharat Road and ZF Commercial.

Diversification Opportunities for Bharat Road and ZF Commercial

-0.31

Correlation Coefficient

Bharat Road  ZF Commercial

Very good diversification

The 3 months correlation between Bharat and ZFCVINDIA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bharat Road Network and ZF Commercial Vehicle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZF Commercial Vehicle and Bharat Road 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 Bharat Road Network are associated (or correlated) with ZF Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZF Commercial Vehicle has no effect on the direction of Bharat Road i.e., Bharat Road and ZF Commercial go up and down completely randomly.

Pair Corralation between Bharat Road and ZF Commercial

Assuming the 90 days trading horizon Bharat Road Network is expected to under-perform the ZF Commercial. In addition to that, Bharat Road is 1.51 times more volatile than ZF Commercial Vehicle. It trades about -0.13 of its total potential returns per unit of risk. ZF Commercial Vehicle is currently generating about 0.07 per unit of volatility. If you would invest  1,265,800  in ZF Commercial Vehicle on April 25, 2025 and sell it today you would earn a total of  80,500  from holding ZF Commercial Vehicle or generate 6.36% return on investment over 90 days.

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

Bharat Road Network  vs.  ZF Commercial Vehicle

Bharat Road Network

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bharat Road Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ZF Commercial Vehicle

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZF Commercial Vehicle are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ZF Commercial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Bharat Road and ZF Commercial

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

The idea behind Bharat Road Network and ZF Commercial Vehicle 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.