Correlation Between Advani Hotels and Jai Balaji

Can any of the company-specific risk be diversified away by investing in both Advani Hotels and Jai Balaji 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 Jai Balaji 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 Jai Balaji Industries, you can compare the effects of market volatilities on Advani Hotels and Jai Balaji 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 Jai Balaji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advani Hotels and Jai Balaji.

Diversification Opportunities for Advani Hotels and Jai Balaji

0.86

Correlation Coefficient

Advani Hotels  Jai Balaji

Very poor diversification

The 3 months correlation between Advani and Jai is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Advani Hotels Resorts and Jai Balaji Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jai Balaji Industries 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 Jai Balaji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jai Balaji Industries has no effect on the direction of Advani Hotels i.e., Advani Hotels and Jai Balaji go up and down completely randomly.

Pair Corralation between Advani Hotels and Jai Balaji

Assuming the 90 days trading horizon Advani Hotels Resorts is expected to generate 0.72 times more return on investment than Jai Balaji. However, Advani Hotels Resorts is 1.4 times less risky than Jai Balaji. It trades about -0.07 of its potential returns per unit of risk. Jai Balaji Industries is currently generating about -0.1 per unit of risk. If you would invest  6,705  in Advani Hotels Resorts on December 27, 2024 and sell it today you would lose (894.00) from holding Advani Hotels Resorts or give up 13.33% of portfolio value over 90 days.

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

Advani Hotels Resorts  vs.  Jai Balaji Industries

Advani Hotels Resorts

Risk-Adjusted Performance

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 weak 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.

Jai Balaji Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jai Balaji Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Advani Hotels and Jai Balaji

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

The idea behind Advani Hotels Resorts and Jai Balaji Industries 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.