Correlation Between Asian Hotels and BAG Films

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

Diversification Opportunities for Asian Hotels and BAG Films

-0.43

Correlation Coefficient

Asian Hotels  BAG Films

Very good diversification

The 3 months correlation between Asian and BAG is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Asian Hotels Limited and BAG Films and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAG Films 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 BAG Films. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAG Films has no effect on the direction of Asian Hotels i.e., Asian Hotels and BAG Films go up and down completely randomly.

Pair Corralation between Asian Hotels and BAG Films

Assuming the 90 days trading horizon Asian Hotels Limited is expected to generate 0.95 times more return on investment than BAG Films. However, Asian Hotels Limited is 1.06 times less risky than BAG Films. It trades about 0.22 of its potential returns per unit of risk. BAG Films and is currently generating about -0.32 per unit of risk. If you would invest  27,687  in Asian Hotels Limited on December 26, 2024 and sell it today you would earn a total of  11,608  from holding Asian Hotels Limited or generate 41.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Asian Hotels Limited  vs.  BAG Films and

Asian Hotels Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asian Hotels Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Asian Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

BAG Films

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAG Films and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Asian Hotels and BAG Films

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

The idea behind Asian Hotels Limited and BAG Films and 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.