Correlation Between Bharti Airtel and Bosch

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

By analyzing existing cross correlation between Bharti Airtel Limited and Bosch Limited, you can compare the effects of market volatilities on Bharti Airtel and Bosch 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 Bharti Airtel with a short position of Bosch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharti Airtel and Bosch.

Diversification Opportunities for Bharti Airtel and Bosch

-0.55

Correlation Coefficient

Bharti Airtel  Bosch

Excellent diversification

The 3 months correlation between Bharti and Bosch is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bharti Airtel Limited and Bosch Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosch Limited and Bharti Airtel 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 Bharti Airtel Limited are associated (or correlated) with Bosch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosch Limited has no effect on the direction of Bharti Airtel i.e., Bharti Airtel and Bosch go up and down completely randomly.

Pair Corralation between Bharti Airtel and Bosch

Assuming the 90 days trading horizon Bharti Airtel Limited is expected to generate 1.15 times more return on investment than Bosch. However, Bharti Airtel is 1.15 times more volatile than Bosch Limited. It trades about 0.02 of its potential returns per unit of risk. Bosch Limited is currently generating about -0.33 per unit of risk. If you would invest  158,410  in Bharti Airtel Limited on December 4, 2024 and sell it today you would earn a total of  1,170  from holding Bharti Airtel Limited or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Bharti Airtel Limited  vs.  Bosch Limited

Bharti Airtel Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bharti Airtel Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bharti Airtel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bosch Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bharti Airtel and Bosch

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

The idea behind Bharti Airtel Limited and Bosch Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.