Correlation Between Bodhi Tree and Gujarat Lease
Can any of the company-specific risk be diversified away by investing in both Bodhi Tree and Gujarat Lease 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 Gujarat Lease 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 Gujarat Lease Financing, you can compare the effects of market volatilities on Bodhi Tree and Gujarat Lease 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 Gujarat Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bodhi Tree and Gujarat Lease.
Diversification Opportunities for Bodhi Tree and Gujarat Lease
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bodhi and Gujarat is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and Gujarat Lease Financing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Lease Financing 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 Gujarat Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Lease Financing has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and Gujarat Lease go up and down completely randomly.
Pair Corralation between Bodhi Tree and Gujarat Lease
Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to generate 1.51 times more return on investment than Gujarat Lease. However, Bodhi Tree is 1.51 times more volatile than Gujarat Lease Financing. It trades about -0.05 of its potential returns per unit of risk. Gujarat Lease Financing is currently generating about -0.11 per unit of risk. If you would invest 1,215 in Bodhi Tree Multimedia on October 30, 2024 and sell it today you would lose (125.00) from holding Bodhi Tree Multimedia or give up 10.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bodhi Tree Multimedia vs. Gujarat Lease Financing
Performance |
| Timeline |
| Bodhi Tree Multimedia |
| Gujarat Lease Financing |
Bodhi Tree and Gujarat Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bodhi Tree and Gujarat Lease
The main advantage of trading using opposite Bodhi Tree and Gujarat Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bodhi Tree position performs unexpectedly, Gujarat Lease 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 Gujarat Lease will offset losses from the drop in Gujarat Lease's long position.| Bodhi Tree vs. Shaily Engineering Plastics | Bodhi Tree vs. General Insurance | Bodhi Tree vs. CREDITACCESS GRAMEEN LIMITED | Bodhi Tree vs. Hybrid Financial Services |
| Gujarat Lease vs. Edelweiss Financial Services | Gujarat Lease vs. Arman Financial Services | Gujarat Lease vs. Plastiblends India Limited | Gujarat Lease vs. General Insurance |
Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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