Correlation Between Ally Leasehold and Royal Orchid

Can any of the company-specific risk be diversified away by investing in both Ally Leasehold and Royal Orchid 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 Ally Leasehold and Royal Orchid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ally Leasehold Real and Royal Orchid Hotel, you can compare the effects of market volatilities on Ally Leasehold and Royal Orchid 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 Ally Leasehold with a short position of Royal Orchid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Leasehold and Royal Orchid.

Diversification Opportunities for Ally Leasehold and Royal Orchid

-0.13

Correlation Coefficient

Ally Leasehold  Royal Orchid

Good diversification

The 3 months correlation between Ally and Royal is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ally Leasehold Real and Royal Orchid Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Orchid Hotel and Ally Leasehold 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 Ally Leasehold Real are associated (or correlated) with Royal Orchid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Orchid Hotel has no effect on the direction of Ally Leasehold i.e., Ally Leasehold and Royal Orchid go up and down completely randomly.

Pair Corralation between Ally Leasehold and Royal Orchid

Assuming the 90 days trading horizon Ally Leasehold Real is expected to generate 0.33 times more return on investment than Royal Orchid. However, Ally Leasehold Real is 3.04 times less risky than Royal Orchid. It trades about 0.07 of its potential returns per unit of risk. Royal Orchid Hotel is currently generating about -0.08 per unit of risk. If you would invest  502.00  in Ally Leasehold Real on October 22, 2024 and sell it today you would earn a total of  23.00  from holding Ally Leasehold Real or generate 4.58% return on investment over 90 days.

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

Ally Leasehold Real  vs.  Royal Orchid Hotel

Ally Leasehold Real

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Leasehold Real are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Ally Leasehold is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Royal Orchid Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Orchid Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ally Leasehold and Royal Orchid

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

The idea behind Ally Leasehold Real and Royal Orchid Hotel 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.