Correlation Between BMTC and Foraco International

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

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

Diversification Opportunities for BMTC and Foraco International

0.1

Correlation Coefficient

BMTC  Foraco International

Average diversification

The 3 months correlation between BMTC and Foraco is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding BMTC Group and Foraco International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foraco International and BMTC 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 BMTC Group are associated (or correlated) with Foraco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foraco International has no effect on the direction of BMTC i.e., BMTC and Foraco International go up and down completely randomly.

Pair Corralation between BMTC and Foraco International

Assuming the 90 days trading horizon BMTC Group is expected to generate 0.82 times more return on investment than Foraco International. However, BMTC Group is 1.22 times less risky than Foraco International. It trades about 0.15 of its potential returns per unit of risk. Foraco International SA is currently generating about 0.0 per unit of risk. If you would invest  1,175  in BMTC Group on April 21, 2025 and sell it today you would earn a total of  209.00  from holding BMTC Group or generate 17.79% return on investment over 90 days.

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

BMTC Group  vs.  Foraco International SA

BMTC Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BMTC Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMTC displayed solid returns over the last few months and may actually be approaching a breakup point.

Foraco International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Foraco International SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Foraco International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BMTC and Foraco International

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

The idea behind BMTC Group and Foraco International SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.