Correlation Between Bharti Airtel and Zodiac Clothing

Can any of the company-specific risk be diversified away by investing in both Bharti Airtel and Zodiac Clothing 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 Zodiac Clothing 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 Zodiac Clothing, you can compare the effects of market volatilities on Bharti Airtel and Zodiac Clothing 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 Zodiac Clothing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharti Airtel and Zodiac Clothing.

Diversification Opportunities for Bharti Airtel and Zodiac Clothing

-0.51

Correlation Coefficient

Bharti Airtel  Zodiac Clothing

Excellent diversification

The 3 months correlation between Bharti and Zodiac is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bharti Airtel Limited and Zodiac Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zodiac Clothing 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 Zodiac Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zodiac Clothing has no effect on the direction of Bharti Airtel i.e., Bharti Airtel and Zodiac Clothing go up and down completely randomly.

Pair Corralation between Bharti Airtel and Zodiac Clothing

Assuming the 90 days trading horizon Bharti Airtel Limited is expected to generate 0.46 times more return on investment than Zodiac Clothing. However, Bharti Airtel Limited is 2.17 times less risky than Zodiac Clothing. It trades about 0.1 of its potential returns per unit of risk. Zodiac Clothing is currently generating about -0.19 per unit of risk. If you would invest  158,690  in Bharti Airtel Limited on December 28, 2024 and sell it today you would earn a total of  13,780  from holding Bharti Airtel Limited or generate 8.68% 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.  Zodiac Clothing

Bharti Airtel Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bharti Airtel Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Bharti Airtel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Zodiac Clothing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zodiac Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bharti Airtel and Zodiac Clothing

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

The idea behind Bharti Airtel Limited and Zodiac Clothing 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.