Correlation Between Bosch and Transport

Can any of the company-specific risk be diversified away by investing in both Bosch and Transport 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 Bosch and Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bosch Limited and Transport of, you can compare the effects of market volatilities on Bosch and Transport 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 Bosch with a short position of Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosch and Transport.

Diversification Opportunities for Bosch and Transport

0.57

Correlation Coefficient

Bosch  Transport

Very weak diversification

The 3 months correlation between Bosch and Transport is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bosch Limited and Transport of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Bosch 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 Bosch Limited are associated (or correlated) with Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport has no effect on the direction of Bosch i.e., Bosch and Transport go up and down completely randomly.

Pair Corralation between Bosch and Transport

Assuming the 90 days trading horizon Bosch Limited is expected to generate 0.82 times more return on investment than Transport. However, Bosch Limited is 1.22 times less risky than Transport. It trades about 0.27 of its potential returns per unit of risk. Transport of is currently generating about 0.04 per unit of risk. If you would invest  2,728,910  in Bosch Limited on April 4, 2025 and sell it today you would earn a total of  711,590  from holding Bosch Limited or generate 26.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bosch Limited  vs.  Transport of

Bosch Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bosch Limited are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Bosch unveiled solid returns over the last few months and may actually be approaching a breakup point.

Transport

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transport of are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Transport is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bosch and Transport

The main advantage of trading using opposite Bosch and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bosch position performs unexpectedly, Transport 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 Transport will offset losses from the drop in Transport's long position.

The idea behind Bosch Limited and Transport of 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.