Correlation Between Asian Hotels and Cyber Media

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

Diversification Opportunities for Asian Hotels and Cyber Media

-0.33

Correlation Coefficient

Asian Hotels  Cyber Media

Very good diversification

The 3 months correlation between Asian and Cyber is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Asian Hotels Limited and Cyber Media Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyber Media Research 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 Cyber Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyber Media Research has no effect on the direction of Asian Hotels i.e., Asian Hotels and Cyber Media go up and down completely randomly.

Pair Corralation between Asian Hotels and Cyber Media

Assuming the 90 days trading horizon Asian Hotels Limited is expected to generate 1.52 times more return on investment than Cyber Media. However, Asian Hotels is 1.52 times more volatile than Cyber Media Research. It trades about 0.32 of its potential returns per unit of risk. Cyber Media Research is currently generating about -0.12 per unit of risk. If you would invest  20,893  in Asian Hotels Limited on October 10, 2024 and sell it today you would earn a total of  7,292  from holding Asian Hotels Limited or generate 34.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Asian Hotels Limited  vs.  Cyber Media Research

Asian Hotels Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asian Hotels Limited are ranked lower than 13 (%) 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.

Cyber Media Research

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Asian Hotels and Cyber Media

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

The idea behind Asian Hotels Limited and Cyber Media Research 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.