Correlation Between Advani Hotels and Kaushalya Infrastructure

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

Diversification Opportunities for Advani Hotels and Kaushalya Infrastructure

0.44

Correlation Coefficient

Advani Hotels  Kaushalya Infrastructure

Very weak diversification

The 3 months correlation between Advani and Kaushalya is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Advani Hotels Resorts and Kaushalya Infrastructure Devel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaushalya Infrastructure 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 Kaushalya Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaushalya Infrastructure has no effect on the direction of Advani Hotels i.e., Advani Hotels and Kaushalya Infrastructure go up and down completely randomly.

Pair Corralation between Advani Hotels and Kaushalya Infrastructure

Assuming the 90 days trading horizon Advani Hotels is expected to generate 30.08 times less return on investment than Kaushalya Infrastructure. But when comparing it to its historical volatility, Advani Hotels Resorts is 1.08 times less risky than Kaushalya Infrastructure. It trades about 0.0 of its potential returns per unit of risk. Kaushalya Infrastructure Development is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  79,220  in Kaushalya Infrastructure Development on September 27, 2024 and sell it today you would earn a total of  12,065  from holding Kaushalya Infrastructure Development or generate 15.23% return on investment over 90 days.

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

Advani Hotels Resorts  vs.  Kaushalya Infrastructure Devel

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 conflicting 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.

Kaushalya Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaushalya Infrastructure Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Kaushalya Infrastructure is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Advani Hotels and Kaushalya Infrastructure

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

The idea behind Advani Hotels Resorts and Kaushalya Infrastructure Development 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.