Correlation Between Armada Hflr and Dolphin Hotels

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

By analyzing existing cross correlation between Armada Hflr Pr and Dolphin Hotels PLC, you can compare the effects of market volatilities on Armada Hflr and Dolphin Hotels 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 Armada Hflr with a short position of Dolphin Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Dolphin Hotels.

Diversification Opportunities for Armada Hflr and Dolphin Hotels

0.85

Correlation Coefficient

Armada Hflr  Dolphin Hotels

Very poor diversification

The 3 months correlation between Armada and Dolphin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Dolphin Hotels PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Hotels PLC and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Dolphin Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Hotels PLC has no effect on the direction of Armada Hflr i.e., Armada Hflr and Dolphin Hotels go up and down completely randomly.

Pair Corralation between Armada Hflr and Dolphin Hotels

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Dolphin Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.23 times less risky than Dolphin Hotels. The stock trades about -0.21 of its potential returns per unit of risk. The Dolphin Hotels PLC is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  5,360  in Dolphin Hotels PLC on December 29, 2024 and sell it today you would lose (900.00) from holding Dolphin Hotels PLC or give up 16.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.08%
Values	Daily Returns

Armada Hflr Pr  vs.  Dolphin Hotels PLC

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Dolphin Hotels PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dolphin Hotels PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 Armada Hflr and Dolphin Hotels

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

The idea behind Armada Hflr Pr and Dolphin Hotels PLC 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.