Correlation Between Bodhi Tree and HT Media

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

Diversification Opportunities for Bodhi Tree and HT Media

0.6

Correlation Coefficient

Bodhi Tree  HT Media

Poor diversification

The 3 months correlation between Bodhi and HTMEDIA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and HT Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HT Media Limited 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 HT Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HT Media Limited has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and HT Media go up and down completely randomly.

Pair Corralation between Bodhi Tree and HT Media

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to under-perform the HT Media. In addition to that, Bodhi Tree is 1.27 times more volatile than HT Media Limited. It trades about -0.03 of its total potential returns per unit of risk. HT Media Limited is currently generating about 0.02 per unit of volatility. If you would invest  2,369  in HT Media Limited on September 19, 2024 and sell it today you would earn a total of  26.00  from holding HT Media Limited or generate 1.1% return on investment over 90 days.

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

Bodhi Tree Multimedia  vs.  HT Media Limited

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.

HT Media Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HT Media Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, HT Media is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bodhi Tree and HT Media

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

The idea behind Bodhi Tree Multimedia and HT Media Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.