Correlation Between Aptech and Viceroy Hotels

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

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

Diversification Opportunities for Aptech and Viceroy Hotels

0.05

Correlation Coefficient

Aptech  Viceroy Hotels

Significant diversification

The 3 months correlation between Aptech and Viceroy is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aptech Limited and Viceroy Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viceroy Hotels and Aptech 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 Aptech Limited are associated (or correlated) with Viceroy Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viceroy Hotels has no effect on the direction of Aptech i.e., Aptech and Viceroy Hotels go up and down completely randomly.

Pair Corralation between Aptech and Viceroy Hotels

Assuming the 90 days trading horizon Aptech is expected to generate 123.57 times less return on investment than Viceroy Hotels. But when comparing it to its historical volatility, Aptech Limited is 10.45 times less risky than Viceroy Hotels. It trades about 0.0 of its potential returns per unit of risk. Viceroy Hotels Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  190.00  in Viceroy Hotels Limited on October 3, 2024 and sell it today you would earn a total of  12,198  from holding Viceroy Hotels Limited or generate 6420.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.38%
Values	Daily Returns

Aptech Limited  vs.  Viceroy Hotels Limited

Aptech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Viceroy Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viceroy Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Viceroy Hotels is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aptech and Viceroy Hotels

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

The idea behind Aptech Limited and Viceroy Hotels Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.