Correlation Between Bodhi Tree and Shyam Metalics

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

Diversification Opportunities for Bodhi Tree and Shyam Metalics

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bodhi and Shyam is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics 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 Shyam Metalics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shyam Metalics has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and Shyam Metalics go up and down completely randomly.

Pair Corralation between Bodhi Tree and Shyam Metalics

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to generate 1.76 times more return on investment than Shyam Metalics. However, Bodhi Tree is 1.76 times more volatile than Shyam Metalics and. It trades about -0.06 of its potential returns per unit of risk. Shyam Metalics and is currently generating about -0.13 per unit of risk. If you would invest  1,231  in Bodhi Tree Multimedia on September 21, 2024 and sell it today you would lose (185.00) from holding Bodhi Tree Multimedia or give up 15.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bodhi Tree Multimedia  vs.  Shyam Metalics and

 Performance 
       Timeline  
Bodhi Tree Multimedia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Shyam Metalics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shyam Metalics and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bodhi Tree and Shyam Metalics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bodhi Tree and Shyam Metalics

The main advantage of trading using opposite Bodhi Tree and Shyam Metalics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bodhi Tree position performs unexpectedly, Shyam Metalics 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 Shyam Metalics will offset losses from the drop in Shyam Metalics' long position.
The idea behind Bodhi Tree Multimedia and Shyam Metalics and 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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