Correlation Between Bodhi Tree and CSB Bank

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

Diversification Opportunities for Bodhi Tree and CSB Bank

BodhiCSBDiversified AwayBodhiCSBDiversified Away100%
0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bodhi and CSB is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and CSB Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSB Bank 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 CSB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSB Bank Limited has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and CSB Bank go up and down completely randomly.

Pair Corralation between Bodhi Tree and CSB Bank

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to under-perform the CSB Bank. In addition to that, Bodhi Tree is 1.87 times more volatile than CSB Bank Limited. It trades about -0.14 of its total potential returns per unit of risk. CSB Bank Limited is currently generating about -0.18 per unit of volatility. If you would invest  30,270  in CSB Bank Limited on November 30, 2024 and sell it today you would lose (2,225) from holding CSB Bank Limited or give up 7.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bodhi Tree Multimedia  vs.  CSB Bank Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15BTML CSBBANK
       Timeline  
Bodhi Tree Multimedia 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15JanFebFeb891011121314
CSB Bank Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days CSB Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
JavaScript chart by amCharts 3.21.15JanFebFeb280290300310320330

Bodhi Tree and CSB Bank Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.38-4.78-3.18-1.580.01.533.094.656.21 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15BTML CSBBANK
       Returns  

Pair Trading with Bodhi Tree and CSB Bank

The main advantage of trading using opposite Bodhi Tree and CSB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bodhi Tree position performs unexpectedly, CSB Bank 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 CSB Bank will offset losses from the drop in CSB Bank's long position.
The idea behind Bodhi Tree Multimedia and CSB Bank 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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