Correlation Between Advani Hotels and CCL Products

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

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

Diversification Opportunities for Advani Hotels and CCL Products

0.32

Correlation Coefficient

Advani Hotels  CCL Products

Weak diversification

The 3 months correlation between Advani and CCL is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Advani Hotels Resorts and CCL Products Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Products Limited and Advani Hotels 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 Advani Hotels Resorts are associated (or correlated) with CCL Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Products Limited has no effect on the direction of Advani Hotels i.e., Advani Hotels and CCL Products go up and down completely randomly.

Pair Corralation between Advani Hotels and CCL Products

Assuming the 90 days trading horizon Advani Hotels Resorts is expected to under-perform the CCL Products. But the stock apears to be less risky and, when comparing its historical volatility, Advani Hotels Resorts is 1.03 times less risky than CCL Products. The stock trades about -0.07 of its potential returns per unit of risk. The CCL Products Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  66,900  in CCL Products Limited on October 9, 2024 and sell it today you would earn a total of  2,950  from holding CCL Products Limited or generate 4.41% return on investment over 90 days.

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

Advani Hotels Resorts  vs.  CCL Products Limited

Advani Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advani Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

CCL Products Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CCL Products Limited 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, CCL Products is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Advani Hotels and CCL Products

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

The idea behind Advani Hotels Resorts and CCL Products 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.