Correlation Between BII Railway and Scotts Miracle

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

By analyzing existing cross correlation between BII Railway Transportation and The Scotts Miracle Gro, you can compare the effects of market volatilities on BII Railway and Scotts Miracle 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 BII Railway with a short position of Scotts Miracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Scotts Miracle.

Diversification Opportunities for BII Railway and Scotts Miracle

0.58

Correlation Coefficient

BII Railway  Scotts Miracle

Very weak diversification

The 3 months correlation between BII and Scotts is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and The Scotts Miracle Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scotts Miracle and BII Railway 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 BII Railway Transportation are associated (or correlated) with Scotts Miracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scotts Miracle has no effect on the direction of BII Railway i.e., BII Railway and Scotts Miracle go up and down completely randomly.

Pair Corralation between BII Railway and Scotts Miracle

Assuming the 90 days horizon BII Railway is expected to generate 2.05 times less return on investment than Scotts Miracle. But when comparing it to its historical volatility, BII Railway Transportation is 1.25 times less risky than Scotts Miracle. It trades about 0.12 of its potential returns per unit of risk. The Scotts Miracle Gro is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,353  in The Scotts Miracle Gro on April 20, 2025 and sell it today you would earn a total of  1,412  from holding The Scotts Miracle Gro or generate 32.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

BII Railway Transportation  vs.  The Scotts Miracle Gro

BII Railway Transpor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BII Railway Transportation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BII Railway reported solid returns over the last few months and may actually be approaching a breakup point.

Scotts Miracle

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Scotts Miracle Gro are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scotts Miracle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BII Railway and Scotts Miracle

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

The idea behind BII Railway Transportation and The Scotts Miracle Gro 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.