Correlation Between Sasken Technologies and Bodhi Tree

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

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

Diversification Opportunities for Sasken Technologies and Bodhi Tree

-0.52

Correlation Coefficient

Sasken Technologies  Bodhi Tree

Excellent diversification

The 3 months correlation between Sasken and Bodhi is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sasken Technologies Limited 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 Sasken Technologies 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 Sasken Technologies Limited 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 Sasken Technologies i.e., Sasken Technologies and Bodhi Tree go up and down completely randomly.

Pair Corralation between Sasken Technologies and Bodhi Tree

Assuming the 90 days trading horizon Sasken Technologies Limited is expected to generate 0.95 times more return on investment than Bodhi Tree. However, Sasken Technologies Limited is 1.05 times less risky than Bodhi Tree. It trades about 0.21 of its potential returns per unit of risk. Bodhi Tree Multimedia is currently generating about -0.04 per unit of risk. If you would invest  145,421  in Sasken Technologies Limited on October 7, 2024 and sell it today you would earn a total of  68,734  from holding Sasken Technologies Limited or generate 47.27% return on investment over 90 days.

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

Sasken Technologies Limited  vs.  Bodhi Tree Multimedia

Sasken Technologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sasken Technologies Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward-looking signals, Sasken Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

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 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.

Pair Trading with Sasken Technologies and Bodhi Tree

The main advantage of trading using opposite Sasken Technologies and Bodhi Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasken Technologies 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 Sasken Technologies Limited 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 Global Correlations module to find global opportunities by holding instruments from different markets.