Correlation Between Sapphire Foods and Bodhi Tree

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

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

Diversification Opportunities for Sapphire Foods and Bodhi Tree

0.49

Correlation Coefficient

Sapphire Foods  Bodhi Tree

Very weak diversification

The 3 months correlation between Sapphire and Bodhi is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sapphire Foods India 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 Sapphire Foods 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 Sapphire Foods India 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 Sapphire Foods i.e., Sapphire Foods and Bodhi Tree go up and down completely randomly.

Pair Corralation between Sapphire Foods and Bodhi Tree

Assuming the 90 days trading horizon Sapphire Foods is expected to generate 23.74 times less return on investment than Bodhi Tree. But when comparing it to its historical volatility, Sapphire Foods India is 2.02 times less risky than Bodhi Tree. It trades about 0.0 of its potential returns per unit of risk. Bodhi Tree Multimedia is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,215  in Bodhi Tree Multimedia on October 10, 2024 and sell it today you would earn a total of  63.00  from holding Bodhi Tree Multimedia or generate 5.19% return on investment over 90 days.

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

Sapphire Foods India  vs.  Bodhi Tree Multimedia

Sapphire Foods India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapphire Foods India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Sapphire Foods is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Bodhi Tree Multimedia

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bodhi Tree Multimedia are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bodhi Tree may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sapphire Foods and Bodhi Tree

The main advantage of trading using opposite Sapphire Foods and Bodhi Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapphire Foods 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 Sapphire Foods India 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.