Correlation Between Bodhi Tree and Tata Communications

Can any of the company-specific risk be diversified away by investing in both Bodhi Tree and Tata Communications 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 Tata Communications 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 Tata Communications Limited, you can compare the effects of market volatilities on Bodhi Tree and Tata Communications 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 Tata Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bodhi Tree and Tata Communications.

Diversification Opportunities for Bodhi Tree and Tata Communications

0.03

Correlation Coefficient

Bodhi Tree  Tata Communications

Significant diversification

The 3 months correlation between Bodhi and Tata is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bodhi Tree Multimedia and Tata Communications Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Communications 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 Tata Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Communications has no effect on the direction of Bodhi Tree i.e., Bodhi Tree and Tata Communications go up and down completely randomly.

Pair Corralation between Bodhi Tree and Tata Communications

Assuming the 90 days trading horizon Bodhi Tree Multimedia is expected to under-perform the Tata Communications. In addition to that, Bodhi Tree is 2.78 times more volatile than Tata Communications Limited. It trades about 0.0 of its total potential returns per unit of risk. Tata Communications Limited is currently generating about 0.13 per unit of volatility. If you would invest  156,078  in Tata Communications Limited on March 31, 2025 and sell it today you would earn a total of  11,802  from holding Tata Communications Limited or generate 7.56% return on investment over 90 days.

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

Bodhi Tree Multimedia  vs.  Tata Communications Limited

Bodhi Tree Multimedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bodhi Tree Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bodhi Tree is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Tata Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tata Communications Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Tata Communications may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with Bodhi Tree and Tata Communications

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

The idea behind Bodhi Tree Multimedia and Tata Communications Limited 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.

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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.