Correlation Between Bodhi Tree and UFLEX
Can any of the company-specific risk be diversified away by investing in both Bodhi Tree and UFLEX 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 UFLEX 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 UFLEX Limited, you can compare the effects of market volatilities on Bodhi Tree and UFLEX 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 UFLEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bodhi Tree and UFLEX.
Diversification Opportunities for Bodhi Tree and UFLEX
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bodhi and UFLEX is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and UFLEX Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFLEX 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 UFLEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UFLEX Limited has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and UFLEX go up and down completely randomly.
Pair Corralation between Bodhi Tree and UFLEX
Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to generate 1.36 times more return on investment than UFLEX. However, Bodhi Tree is 1.36 times more volatile than UFLEX Limited. It trades about 0.03 of its potential returns per unit of risk. UFLEX Limited is currently generating about -0.15 per unit of risk. If you would invest 1,199 in Bodhi Tree Multimedia on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Bodhi Tree Multimedia or generate 1.33% 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. UFLEX Limited
Performance |
| Timeline |
| Bodhi Tree Multimedia |
| UFLEX Limited |
Bodhi Tree and UFLEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bodhi Tree and UFLEX
The main advantage of trading using opposite Bodhi Tree and UFLEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bodhi Tree position performs unexpectedly, UFLEX 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 UFLEX will offset losses from the drop in UFLEX's long position.| Bodhi Tree vs. Cantabil Retail India | Bodhi Tree vs. Jaypee Infratech Limited | Bodhi Tree vs. Styrenix Performance Materials | Bodhi Tree vs. Future Retail Limited |
| UFLEX vs. Bharatiya Global Infomedia | UFLEX vs. Varun Beverages Limited | UFLEX vs. Bodhi Tree Multimedia | UFLEX vs. Cyber Media Research |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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