Correlation Between Bri Chem and ADF

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

By analyzing existing cross correlation between Bri Chem Corp and ADF Group, you can compare the effects of market volatilities on Bri Chem and ADF 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 Bri Chem with a short position of ADF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bri Chem and ADF.

Diversification Opportunities for Bri Chem and ADF

-0.14

Correlation Coefficient

Bri Chem  ADF

Good diversification

The 3 months correlation between Bri and ADF is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and ADF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Group and Bri Chem 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 Bri Chem Corp are associated (or correlated) with ADF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Group has no effect on the direction of Bri Chem i.e., Bri Chem and ADF go up and down completely randomly.

Pair Corralation between Bri Chem and ADF

Assuming the 90 days trading horizon Bri Chem is expected to generate 5.26 times less return on investment than ADF. In addition to that, Bri Chem is 1.21 times more volatile than ADF Group. It trades about 0.02 of its total potential returns per unit of risk. ADF Group is currently generating about 0.11 per unit of volatility. If you would invest  623.00  in ADF Group on April 24, 2025 and sell it today you would earn a total of  170.00  from holding ADF Group or generate 27.29% return on investment over 90 days.

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

Bri Chem Corp  vs.  ADF Group

Bri Chem Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bri Chem Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bri Chem is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ADF Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADF Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, ADF displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bri Chem and ADF

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

The idea behind Bri Chem Corp and ADF Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.