Correlation Between Bodhi Tree and Baazar Style

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

Diversification Opportunities for Bodhi Tree and Baazar Style

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bodhi and Baazar is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and Baazar Style Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baazar Style Retail 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 Baazar Style. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baazar Style Retail has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and Baazar Style go up and down completely randomly.

Pair Corralation between Bodhi Tree and Baazar Style

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to generate 1.58 times more return on investment than Baazar Style. However, Bodhi Tree is 1.58 times more volatile than Baazar Style Retail. It trades about 0.15 of its potential returns per unit of risk. Baazar Style Retail is currently generating about -0.24 per unit of risk. If you would invest  1,137  in Bodhi Tree Multimedia on October 14, 2024 and sell it today you would earn a total of  144.00  from holding Bodhi Tree Multimedia or generate 12.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bodhi Tree Multimedia  vs.  Baazar Style Retail

 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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Baazar Style Retail 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Baazar Style Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bodhi Tree and Baazar Style Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bodhi Tree and Baazar Style

The main advantage of trading using opposite Bodhi Tree and Baazar Style positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bodhi Tree position performs unexpectedly, Baazar Style 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 Baazar Style will offset losses from the drop in Baazar Style's long position.
The idea behind Bodhi Tree Multimedia and Baazar Style Retail 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.
Check out your portfolio center.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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