Correlation Between General Insurance and Bodhi Tree
Can any of the company-specific risk be diversified away by investing in both General Insurance 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 General Insurance and Bodhi Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Insurance and Bodhi Tree Multimedia, you can compare the effects of market volatilities on General Insurance 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 General Insurance with a short position of Bodhi Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Insurance and Bodhi Tree.
Diversification Opportunities for General Insurance and Bodhi Tree
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between General and Bodhi is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance 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 General Insurance 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 General Insurance 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 General Insurance i.e., General Insurance and Bodhi Tree go up and down completely randomly.
Pair Corralation between General Insurance and Bodhi Tree
Assuming the 90 days trading horizon General Insurance is expected to generate 0.9 times more return on investment than Bodhi Tree. However, General Insurance is 1.11 times less risky than Bodhi Tree. It trades about -0.06 of its potential returns per unit of risk. Bodhi Tree Multimedia is currently generating about -0.11 per unit of risk. If you would invest 43,505 in General Insurance on November 7, 2024 and sell it today you would lose (2,360) from holding General Insurance or give up 5.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Insurance vs. Bodhi Tree Multimedia
Performance |
| Timeline |
| General Insurance |
| Bodhi Tree Multimedia |
General Insurance and Bodhi Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Insurance and Bodhi Tree
The main advantage of trading using opposite General Insurance and Bodhi Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Insurance 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.| General Insurance vs. Hindcon Chemicals Limited | General Insurance vs. V2 Retail Limited | General Insurance vs. Praxis Home Retail | General Insurance vs. DMCC SPECIALITY CHEMICALS |
| Bodhi Tree vs. Centum Electronics Limited | Bodhi Tree vs. Sambhaav Media Limited | Bodhi Tree vs. Electronics Mart India | Bodhi Tree vs. Zee Entertainment Enterprises |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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