Correlation Between Bodhi Tree and Kohinoor Foods

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

Diversification Opportunities for Bodhi Tree and Kohinoor Foods

0.13

Correlation Coefficient

Bodhi Tree  Kohinoor Foods

Average diversification

The 3 months correlation between Bodhi and Kohinoor is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and Kohinoor Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohinoor Foods 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 Kohinoor Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohinoor Foods has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and Kohinoor Foods go up and down completely randomly.

Pair Corralation between Bodhi Tree and Kohinoor Foods

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to generate 1.22 times more return on investment than Kohinoor Foods. However, Bodhi Tree is 1.22 times more volatile than Kohinoor Foods Limited. It trades about 0.02 of its potential returns per unit of risk. Kohinoor Foods Limited is currently generating about 0.0 per unit of risk. If you would invest  1,130  in Bodhi Tree Multimedia on October 8, 2024 and sell it today you would earn a total of  3.00  from holding Bodhi Tree Multimedia or generate 0.27% return on investment over 90 days.

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

Bodhi Tree Multimedia  vs.  Kohinoor Foods Limited

Bodhi Tree Multimedia

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bodhi Tree Multimedia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bodhi Tree is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Kohinoor Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bodhi Tree and Kohinoor Foods

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

The idea behind Bodhi Tree Multimedia and Kohinoor Foods 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.