Correlation Between Frontier Developments and BSF Enterprise

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

By analyzing existing cross correlation between Frontier Developments Plc and BSF Enterprise Plc, you can compare the effects of market volatilities on Frontier Developments and BSF Enterprise 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 Frontier Developments with a short position of BSF Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Developments and BSF Enterprise.

Diversification Opportunities for Frontier Developments and BSF Enterprise

0.83

Correlation Coefficient

Frontier Developments  BSF Enterprise

Very poor diversification

The 3 months correlation between Frontier and BSF is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Developments Plc and BSF Enterprise Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSF Enterprise Plc and Frontier Developments 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 Frontier Developments Plc are associated (or correlated) with BSF Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSF Enterprise Plc has no effect on the direction of Frontier Developments i.e., Frontier Developments and BSF Enterprise go up and down completely randomly.

Pair Corralation between Frontier Developments and BSF Enterprise

Assuming the 90 days trading horizon Frontier Developments is expected to generate 3.23 times less return on investment than BSF Enterprise. But when comparing it to its historical volatility, Frontier Developments Plc is 3.27 times less risky than BSF Enterprise. It trades about 0.14 of its potential returns per unit of risk. BSF Enterprise Plc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  200.00  in BSF Enterprise Plc on July 23, 2025 and sell it today you would earn a total of  103.00  from holding BSF Enterprise Plc or generate 51.5% return on investment over 90 days.

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

Frontier Developments Plc  vs.  BSF Enterprise Plc

Frontier Developments Plc

Risk-Adjusted Performance

Good

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

BSF Enterprise Plc

Risk-Adjusted Performance

Fair

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

Pair Trading with Frontier Developments and BSF Enterprise

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

The idea behind Frontier Developments Plc and BSF Enterprise Plc 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .