Correlation Between Byke Hospitality and KEI Industries

Can any of the company-specific risk be diversified away by investing in both Byke Hospitality and KEI Industries 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 Byke Hospitality and KEI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Byke Hospitality and KEI Industries Limited, you can compare the effects of market volatilities on Byke Hospitality and KEI Industries 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 Byke Hospitality with a short position of KEI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byke Hospitality and KEI Industries.

Diversification Opportunities for Byke Hospitality and KEI Industries

0.67

Correlation Coefficient

Byke Hospitality  KEI Industries

Poor diversification

The 3 months correlation between Byke and KEI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Byke Hospitality and KEI Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEI Industries and Byke Hospitality 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 The Byke Hospitality are associated (or correlated) with KEI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEI Industries has no effect on the direction of Byke Hospitality i.e., Byke Hospitality and KEI Industries go up and down completely randomly.

Pair Corralation between Byke Hospitality and KEI Industries

Assuming the 90 days trading horizon The Byke Hospitality is expected to under-perform the KEI Industries. But the stock apears to be less risky and, when comparing its historical volatility, The Byke Hospitality is 1.24 times less risky than KEI Industries. The stock trades about -0.19 of its potential returns per unit of risk. The KEI Industries Limited is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  416,233  in KEI Industries Limited on December 20, 2024 and sell it today you would lose (87,908) from holding KEI Industries Limited or give up 21.12% of portfolio value over 90 days.

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

The Byke Hospitality  vs.  KEI Industries Limited

Byke Hospitality

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Byke Hospitality 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.

KEI Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days KEI Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Byke Hospitality and KEI Industries

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

The idea behind The Byke Hospitality and KEI Industries 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.