Correlation Between Radaan Mediaworks and Bodhi Tree

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

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

Diversification Opportunities for Radaan Mediaworks and Bodhi Tree

-0.5

Correlation Coefficient

Radaan Mediaworks  Bodhi Tree

Very good diversification

The 3 months correlation between Radaan and Bodhi is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Radaan Mediaworks 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 Radaan Mediaworks 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 Radaan Mediaworks 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 Radaan Mediaworks i.e., Radaan Mediaworks and Bodhi Tree go up and down completely randomly.

Pair Corralation between Radaan Mediaworks and Bodhi Tree

Assuming the 90 days trading horizon Radaan Mediaworks is expected to generate 15.91 times less return on investment than Bodhi Tree. But when comparing it to its historical volatility, Radaan Mediaworks India is 26.94 times less risky than Bodhi Tree. It trades about 0.12 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  1,104  in Bodhi Tree Multimedia on September 19, 2024 and sell it today you would lose (18.00) from holding Bodhi Tree Multimedia or give up 1.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.6%
Values	Daily Returns

Radaan Mediaworks India  vs.  Bodhi Tree Multimedia

Radaan Mediaworks India

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Radaan Mediaworks India are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Radaan Mediaworks 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 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.

Pair Trading with Radaan Mediaworks and Bodhi Tree

The main advantage of trading using opposite Radaan Mediaworks and Bodhi Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radaan Mediaworks 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 Radaan Mediaworks 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.