Correlation Between Asian Hotels and Spencers Retail

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

Diversification Opportunities for Asian Hotels and Spencers Retail

-0.36

Correlation Coefficient

Asian Hotels  Spencers Retail

Very good diversification

The 3 months correlation between Asian and Spencers is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Asian Hotels Limited and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail 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 Spencers Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spencers Retail has no effect on the direction of Asian Hotels i.e., Asian Hotels and Spencers Retail go up and down completely randomly.

Pair Corralation between Asian Hotels and Spencers Retail

Assuming the 90 days trading horizon Asian Hotels Limited is expected to generate 1.23 times more return on investment than Spencers Retail. However, Asian Hotels is 1.23 times more volatile than Spencers Retail Limited. It trades about 0.24 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about -0.03 per unit of risk. If you would invest  18,449  in Asian Hotels Limited on October 26, 2024 and sell it today you would earn a total of  12,321  from holding Asian Hotels Limited or generate 66.78% return on investment over 90 days.

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

Asian Hotels Limited  vs.  Spencers Retail Limited

Asian Hotels Limited

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asian Hotels Limited are ranked lower than 19 (%) 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.

Spencers Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spencers Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Spencers Retail is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Asian Hotels and Spencers Retail

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

The idea behind Asian Hotels Limited and Spencers Retail 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.