Correlation Between BLANTYRE HOTELS and FDH BANK

Can any of the company-specific risk be diversified away by investing in both BLANTYRE HOTELS and FDH BANK 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 BLANTYRE HOTELS and FDH BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BLANTYRE HOTELS LIMITED and FDH BANK PLC, you can compare the effects of market volatilities on BLANTYRE HOTELS and FDH BANK 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 BLANTYRE HOTELS with a short position of FDH BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLANTYRE HOTELS and FDH BANK.

Diversification Opportunities for BLANTYRE HOTELS and FDH BANK

-0.72

Correlation Coefficient

BLANTYRE HOTELS  FDH BANK

Pay attention - limited upside

The 3 months correlation between BLANTYRE and FDH is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding BLANTYRE HOTELS LIMITED and FDH BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDH BANK PLC and BLANTYRE 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 BLANTYRE HOTELS LIMITED are associated (or correlated) with FDH BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDH BANK PLC has no effect on the direction of BLANTYRE HOTELS i.e., BLANTYRE HOTELS and FDH BANK go up and down completely randomly.

Pair Corralation between BLANTYRE HOTELS and FDH BANK

Assuming the 90 days trading horizon BLANTYRE HOTELS LIMITED is expected to generate 4.21 times more return on investment than FDH BANK. However, BLANTYRE HOTELS is 4.21 times more volatile than FDH BANK PLC. It trades about 0.13 of its potential returns per unit of risk. FDH BANK PLC is currently generating about -0.14 per unit of risk. If you would invest  1,420  in BLANTYRE HOTELS LIMITED on October 21, 2024 and sell it today you would earn a total of  35.00  from holding BLANTYRE HOTELS LIMITED or generate 2.46% return on investment over 90 days.

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

BLANTYRE HOTELS LIMITED  vs.  FDH BANK PLC

BLANTYRE HOTELS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BLANTYRE HOTELS LIMITED are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, BLANTYRE HOTELS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

FDH BANK PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FDH BANK PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FDH BANK is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BLANTYRE HOTELS and FDH BANK

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

The idea behind BLANTYRE HOTELS LIMITED and FDH BANK PLC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.