Correlation Between Bodhi Tree and Welspun Investments

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

Diversification Opportunities for Bodhi Tree and Welspun Investments

0.06

Correlation Coefficient

Bodhi Tree  Welspun Investments

Significant diversification

The 3 months correlation between Bodhi and Welspun is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and Welspun Investments and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welspun Investments and 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 Welspun Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welspun Investments and has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and Welspun Investments go up and down completely randomly.

Pair Corralation between Bodhi Tree and Welspun Investments

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to generate 1.0 times more return on investment than Welspun Investments. However, Bodhi Tree Multimedia is 1.0 times less risky than Welspun Investments. It trades about 0.19 of its potential returns per unit of risk. Welspun Investments and is currently generating about -0.13 per unit of risk. If you would invest  1,044  in Bodhi Tree Multimedia on October 23, 2024 and sell it today you would earn a total of  181.00  from holding Bodhi Tree Multimedia or generate 17.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Bodhi Tree Multimedia  vs.  Welspun Investments and

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

Welspun Investments and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Welspun Investments and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward 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.

Pair Trading with Bodhi Tree and Welspun Investments

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

The idea behind Bodhi Tree Multimedia and Welspun Investments 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.