Correlation Between Bodhi Tree and Surya Roshni

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

Diversification Opportunities for Bodhi Tree and Surya Roshni

-0.03

Correlation Coefficient

Bodhi Tree  Surya Roshni

Good diversification

The 3 months correlation between Bodhi and Surya is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and Surya Roshni Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Roshni Limited 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 Surya Roshni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Roshni Limited has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and Surya Roshni go up and down completely randomly.

Pair Corralation between Bodhi Tree and Surya Roshni

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to generate 1.47 times more return on investment than Surya Roshni. However, Bodhi Tree is 1.47 times more volatile than Surya Roshni Limited. It trades about 0.12 of its potential returns per unit of risk. Surya Roshni Limited is currently generating about -0.19 per unit of risk. If you would invest  1,166  in Bodhi Tree Multimedia on October 12, 2024 and sell it today you would earn a total of  118.00  from holding Bodhi Tree Multimedia or generate 10.12% return on investment over 90 days.

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

Bodhi Tree Multimedia  vs.  Surya Roshni Limited

Bodhi Tree Multimedia

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Bodhi Tree is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Surya Roshni Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surya Roshni Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Surya Roshni displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bodhi Tree and Surya Roshni

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

The idea behind Bodhi Tree Multimedia and Surya Roshni 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.