Correlation Between Bodhi Tree and Radaan Mediaworks

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

Diversification Opportunities for Bodhi Tree and Radaan Mediaworks

-0.53

Correlation Coefficient

Bodhi Tree  Radaan Mediaworks

Excellent diversification

The 3 months correlation between Bodhi and Radaan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and Radaan Mediaworks India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radaan Mediaworks India 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 Radaan Mediaworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radaan Mediaworks India has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and Radaan Mediaworks go up and down completely randomly.

Pair Corralation between Bodhi Tree and Radaan Mediaworks

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to under-perform the Radaan Mediaworks. In addition to that, Bodhi Tree is 1.21 times more volatile than Radaan Mediaworks India. It trades about -0.04 of its total potential returns per unit of risk. Radaan Mediaworks India is currently generating about 0.44 per unit of volatility. If you would invest  310.00  in Radaan Mediaworks India on September 20, 2024 and sell it today you would earn a total of  339.00  from holding Radaan Mediaworks India or generate 109.35% return on investment over 90 days.

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

Bodhi Tree Multimedia  vs.  Radaan Mediaworks India

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 unsteady 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.

Radaan Mediaworks India

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Radaan Mediaworks India are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Radaan Mediaworks sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bodhi Tree and Radaan Mediaworks

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

The idea behind Bodhi Tree Multimedia and Radaan Mediaworks India 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.