Correlation Between Hotel Holiday and Unitech Electronics

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

By analyzing existing cross correlation between Hotel Holiday Garden and Unitech Electronics Co, you can compare the effects of market volatilities on Hotel Holiday and Unitech Electronics 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 Hotel Holiday with a short position of Unitech Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Holiday and Unitech Electronics.

Diversification Opportunities for Hotel Holiday and Unitech Electronics

0.53

Correlation Coefficient

Hotel Holiday  Unitech Electronics

Very weak diversification

The 3 months correlation between Hotel and Unitech is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Holiday Garden and Unitech Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Electronics and Hotel Holiday 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 Hotel Holiday Garden are associated (or correlated) with Unitech Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Electronics has no effect on the direction of Hotel Holiday i.e., Hotel Holiday and Unitech Electronics go up and down completely randomly.

Pair Corralation between Hotel Holiday and Unitech Electronics

Assuming the 90 days trading horizon Hotel Holiday Garden is expected to under-perform the Unitech Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Holiday Garden is 1.87 times less risky than Unitech Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The Unitech Electronics Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,209  in Unitech Electronics Co on September 18, 2024 and sell it today you would earn a total of  1,361  from holding Unitech Electronics Co or generate 61.61% return on investment over 90 days.

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

Hotel Holiday Garden  vs.  Unitech Electronics Co

Hotel Holiday Garden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotel Holiday Garden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Unitech Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unitech Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Hotel Holiday and Unitech Electronics

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

The idea behind Hotel Holiday Garden and Unitech Electronics Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.