Correlation Between MIC Electronics and Bodhi Tree
Can any of the company-specific risk be diversified away by investing in both MIC Electronics 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 MIC Electronics and Bodhi Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MIC Electronics Limited and Bodhi Tree Multimedia, you can compare the effects of market volatilities on MIC Electronics 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 MIC Electronics with a short position of Bodhi Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIC Electronics and Bodhi Tree.
Diversification Opportunities for MIC Electronics and Bodhi Tree
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between MIC and Bodhi is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding MIC Electronics Limited 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 MIC Electronics 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 MIC Electronics Limited 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 MIC Electronics i.e., MIC Electronics and Bodhi Tree go up and down completely randomly.
Pair Corralation between MIC Electronics and Bodhi Tree
Assuming the 90 days trading horizon MIC Electronics is expected to generate 12.15 times less return on investment than Bodhi Tree. But when comparing it to its historical volatility, MIC Electronics Limited is 22.05 times less risky than Bodhi Tree. It trades about 0.13 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 1,649 in Bodhi Tree Multimedia on October 26, 2024 and sell it today you would lose (502.00) from holding Bodhi Tree Multimedia or give up 30.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
MIC Electronics Limited vs. Bodhi Tree Multimedia
Performance |
| Timeline |
| MIC Electronics |
| Bodhi Tree Multimedia |
MIC Electronics and Bodhi Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MIC Electronics and Bodhi Tree
The main advantage of trading using opposite MIC Electronics and Bodhi Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MIC Electronics 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.| MIC Electronics vs. HMT Limited | MIC Electronics vs. KIOCL Limited | MIC Electronics vs. Punjab Sind Bank | MIC Electronics vs. ITI Limited |
| Bodhi Tree vs. State Bank of | Bodhi Tree vs. Reliance Industries Limited | Bodhi Tree vs. HDFC Bank Limited | Bodhi Tree vs. Tata Motors Limited |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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