Correlation Between Advani Hotels and JTL Industries

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

Diversification Opportunities for Advani Hotels and JTL Industries

0.61

Correlation Coefficient

Advani Hotels  JTL Industries

Poor diversification

The 3 months correlation between Advani and JTL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Advani Hotels Resorts and JTL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JTL 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 JTL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JTL Industries has no effect on the direction of Advani Hotels i.e., Advani Hotels and JTL Industries go up and down completely randomly.

Pair Corralation between Advani Hotels and JTL Industries

Assuming the 90 days trading horizon Advani Hotels Resorts is expected to generate 0.75 times more return on investment than JTL Industries. However, Advani Hotels Resorts is 1.33 times less risky than JTL Industries. It trades about -0.04 of its potential returns per unit of risk. JTL Industries is currently generating about -0.04 per unit of risk. If you would invest  7,135  in Advani Hotels Resorts on October 8, 2024 and sell it today you would lose (103.00) from holding Advani Hotels Resorts or give up 1.44% of portfolio value over 90 days.

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

Advani Hotels Resorts  vs.  JTL Industries

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 fairly strong basic indicators, Advani Hotels is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

JTL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JTL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Advani Hotels and JTL Industries

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

The idea behind Advani Hotels Resorts and JTL 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.