Correlation Between Asian Hotels and Palred Technologies

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

Diversification Opportunities for Asian Hotels and Palred Technologies

-0.9

Correlation Coefficient

Asian Hotels  Palred Technologies

Pay attention - limited upside

The 3 months correlation between Asian and Palred is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Asian Hotels Limited and Palred Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palred Technologies 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 Palred Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palred Technologies has no effect on the direction of Asian Hotels i.e., Asian Hotels and Palred Technologies go up and down completely randomly.

Pair Corralation between Asian Hotels and Palred Technologies

Assuming the 90 days trading horizon Asian Hotels Limited is expected to generate 1.98 times more return on investment than Palred Technologies. However, Asian Hotels is 1.98 times more volatile than Palred Technologies Limited. It trades about 0.26 of its potential returns per unit of risk. Palred Technologies Limited is currently generating about -0.46 per unit of risk. If you would invest  21,004  in Asian Hotels Limited on December 1, 2024 and sell it today you would earn a total of  15,676  from holding Asian Hotels Limited or generate 74.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Asian Hotels Limited  vs.  Palred Technologies Limited

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 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.

Palred Technologies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Asian Hotels and Palred Technologies

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

The idea behind Asian Hotels Limited and Palred Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.