Correlation Between Network18 Media and Bodhi Tree

Can any of the company-specific risk be diversified away by investing in both Network18 Media and Bodhi Tree 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 Network18 Media and Bodhi Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Network18 Media Investments and Bodhi Tree Multimedia, you can compare the effects of market volatilities on Network18 Media and Bodhi Tree 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 Network18 Media with a short position of Bodhi Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network18 Media and Bodhi Tree.

Diversification Opportunities for Network18 Media and Bodhi Tree

0.07

Correlation Coefficient

Network18 Media  Bodhi Tree

Significant diversification

The 3 months correlation between Network18 and Bodhi is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Network18 Media Investments and Bodhi Tree Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bodhi Tree Multimedia and Network18 Media 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 Network18 Media Investments are associated (or correlated) with Bodhi Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bodhi Tree Multimedia has no effect on the direction of Network18 Media i.e., Network18 Media and Bodhi Tree go up and down completely randomly.

Pair Corralation between Network18 Media and Bodhi Tree

Assuming the 90 days trading horizon Network18 Media Investments is expected to under-perform the Bodhi Tree. But the stock apears to be less risky and, when comparing its historical volatility, Network18 Media Investments is 1.29 times less risky than Bodhi Tree. The stock trades about -0.15 of its potential returns per unit of risk. The Bodhi Tree Multimedia is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,304  in Bodhi Tree Multimedia on October 22, 2024 and sell it today you would lose (86.00) from holding Bodhi Tree Multimedia or give up 6.6% of portfolio value over 90 days.

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

Network18 Media Investments  vs.  Bodhi Tree Multimedia

Network18 Media Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network18 Media Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Network18 Media and Bodhi Tree

The main advantage of trading using opposite Network18 Media and Bodhi Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network18 Media position performs unexpectedly, Bodhi Tree 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 Bodhi Tree will offset losses from the drop in Bodhi Tree's long position.

The idea behind Network18 Media Investments and Bodhi Tree Multimedia 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.