Correlation Between Asian Hotels and Network18 Media

Can any of the company-specific risk be diversified away by investing in both Asian Hotels and Network18 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 Network18 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 Network18 Media Investments, you can compare the effects of market volatilities on Asian Hotels and Network18 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 Network18 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asian Hotels and Network18 Media.

Diversification Opportunities for Asian Hotels and Network18 Media

-0.28

Correlation Coefficient

Asian Hotels  Network18 Media

Very good diversification

The 3 months correlation between Asian and Network18 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Asian Hotels Limited and Network18 Media Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network18 Media Inve 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 Network18 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network18 Media Inve has no effect on the direction of Asian Hotels i.e., Asian Hotels and Network18 Media go up and down completely randomly.

Pair Corralation between Asian Hotels and Network18 Media

Assuming the 90 days trading horizon Asian Hotels Limited is expected to generate 2.41 times more return on investment than Network18 Media. However, Asian Hotels is 2.41 times more volatile than Network18 Media Investments. It trades about 0.3 of its potential returns per unit of risk. Network18 Media Investments is currently generating about -0.13 per unit of risk. If you would invest  19,752  in Asian Hotels Limited on September 25, 2024 and sell it today you would earn a total of  6,617  from holding Asian Hotels Limited or generate 33.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Asian Hotels Limited  vs.  Network18 Media Investments

Asian Hotels Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asian Hotels Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Asian Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Network18 Media Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network18 Media Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Network18 Media is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asian Hotels and Network18 Media

The main advantage of trading using opposite Asian Hotels and Network18 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asian Hotels position performs unexpectedly, Network18 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 Network18 Media will offset losses from the drop in Network18 Media's long position.

The idea behind Asian Hotels Limited and Network18 Media Investments 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.