Correlation Between Asian Hotels and 3M India

Can any of the company-specific risk be diversified away by investing in both Asian Hotels and 3M India 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 Asian Hotels and 3M India into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asian Hotels Limited and 3M India Limited, you can compare the effects of market volatilities on Asian Hotels and 3M India 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 Asian Hotels with a short position of 3M India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asian Hotels and 3M India.

Diversification Opportunities for Asian Hotels and 3M India

0.0

Correlation Coefficient

Asian Hotels  3M India

Pay attention - limited upside

The 3 months correlation between Asian and 3MINDIA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Asian Hotels Limited and 3M India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M India Limited and Asian 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 Asian Hotels Limited are associated (or correlated) with 3M India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M India Limited has no effect on the direction of Asian Hotels i.e., Asian Hotels and 3M India go up and down completely randomly.

Pair Corralation between Asian Hotels and 3M India

If you would invest  7,540  in Asian Hotels Limited on October 25, 2024 and sell it today you would earn a total of  22,810  from holding Asian Hotels Limited or generate 302.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.21%
Values	Daily Returns

Asian Hotels Limited  vs.  3M India Limited

Asian Hotels Limited

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asian Hotels Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Asian Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

3M India Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 3M India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, 3M India is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asian Hotels and 3M India

The main advantage of trading using opposite Asian Hotels and 3M India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asian Hotels position performs unexpectedly, 3M India 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 3M India will offset losses from the drop in 3M India's long position.

The idea behind Asian Hotels Limited and 3M India 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.