Correlation Between Bodhi Tree and Ankit Metal

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

By analyzing existing cross correlation between Bodhi Tree Multimedia and Ankit Metal Power, you can compare the effects of market volatilities on Bodhi Tree and Ankit Metal 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 Bodhi Tree with a short position of Ankit Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bodhi Tree and Ankit Metal.

Diversification Opportunities for Bodhi Tree and Ankit Metal

-0.17

Correlation Coefficient

Bodhi Tree  Ankit Metal

Good diversification

The 3 months correlation between Bodhi and Ankit is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and Ankit Metal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ankit Metal Power and Bodhi Tree 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 Bodhi Tree Multimedia are associated (or correlated) with Ankit Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ankit Metal Power has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and Ankit Metal go up and down completely randomly.

Pair Corralation between Bodhi Tree and Ankit Metal

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to generate 26.21 times more return on investment than Ankit Metal. However, Bodhi Tree is 26.21 times more volatile than Ankit Metal Power. It trades about 0.07 of its potential returns per unit of risk. Ankit Metal Power is currently generating about -0.01 per unit of risk. If you would invest  1,212  in Bodhi Tree Multimedia on September 21, 2024 and sell it today you would lose (166.00) from holding Bodhi Tree Multimedia or give up 13.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.9%
Values	Daily Returns

Bodhi Tree Multimedia  vs.  Ankit Metal Power

Bodhi Tree Multimedia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ankit Metal Power

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ankit Metal Power are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ankit Metal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bodhi Tree and Ankit Metal

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

The idea behind Bodhi Tree Multimedia and Ankit Metal Power 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.