Correlation Between Shipping and Bodhi Tree

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

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

Diversification Opportunities for Shipping and Bodhi Tree

0.47

Correlation Coefficient

Shipping  Bodhi Tree

Very weak diversification

The 3 months correlation between Shipping and Bodhi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Shipping 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 Shipping 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 Shipping 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 Shipping i.e., Shipping and Bodhi Tree go up and down completely randomly.

Pair Corralation between Shipping and Bodhi Tree

Assuming the 90 days trading horizon Shipping is expected to generate 29.15 times less return on investment than Bodhi Tree. But when comparing it to its historical volatility, Shipping is 21.32 times less risky than Bodhi Tree. It trades about 0.05 of its potential returns per unit of risk. Bodhi Tree Multimedia is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  917.00  in Bodhi Tree Multimedia on September 4, 2024 and sell it today you would earn a total of  251.00  from holding Bodhi Tree Multimedia or generate 27.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Shipping  vs.  Bodhi Tree Multimedia

Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 weak 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 Shipping and Bodhi Tree

The main advantage of trading using opposite Shipping and Bodhi Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shipping 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 Shipping 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.