Correlation Between Biofil Chemicals and Samhi Hotels

Can any of the company-specific risk be diversified away by investing in both Biofil Chemicals and Samhi Hotels 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 Biofil Chemicals and Samhi Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Biofil Chemicals Pharmaceuticals and Samhi Hotels Limited, you can compare the effects of market volatilities on Biofil Chemicals and Samhi Hotels 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 Biofil Chemicals with a short position of Samhi Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biofil Chemicals and Samhi Hotels.

Diversification Opportunities for Biofil Chemicals and Samhi Hotels

0.92

Correlation Coefficient

Biofil Chemicals  Samhi Hotels

Almost no diversification

The 3 months correlation between Biofil and Samhi is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Biofil Chemicals Pharmaceutica and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited and Biofil Chemicals 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 Biofil Chemicals Pharmaceuticals are associated (or correlated) with Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of Biofil Chemicals i.e., Biofil Chemicals and Samhi Hotels go up and down completely randomly.

Pair Corralation between Biofil Chemicals and Samhi Hotels

Assuming the 90 days trading horizon Biofil Chemicals Pharmaceuticals is expected to generate 1.05 times more return on investment than Samhi Hotels. However, Biofil Chemicals is 1.05 times more volatile than Samhi Hotels Limited. It trades about -0.13 of its potential returns per unit of risk. Samhi Hotels Limited is currently generating about -0.16 per unit of risk. If you would invest  5,951  in Biofil Chemicals Pharmaceuticals on December 26, 2024 and sell it today you would lose (1,392) from holding Biofil Chemicals Pharmaceuticals or give up 23.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Biofil Chemicals Pharmaceutica  vs.  Samhi Hotels Limited

Biofil Chemicals Pha

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biofil Chemicals Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Samhi Hotels Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samhi Hotels 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 primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Biofil Chemicals and Samhi Hotels

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

The idea behind Biofil Chemicals Pharmaceuticals and Samhi Hotels 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.