Correlation Between Chalet Hotels and Page Industries

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

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

Diversification Opportunities for Chalet Hotels and Page Industries

0.58

Correlation Coefficient

Chalet Hotels  Page Industries

Very weak diversification

The 3 months correlation between Chalet and Page is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chalet Hotels Limited and Page Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Page Industries and Chalet 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 Chalet Hotels Limited are associated (or correlated) with Page Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Page Industries has no effect on the direction of Chalet Hotels i.e., Chalet Hotels and Page Industries go up and down completely randomly.

Pair Corralation between Chalet Hotels and Page Industries

Assuming the 90 days trading horizon Chalet Hotels Limited is expected to generate 1.36 times more return on investment than Page Industries. However, Chalet Hotels is 1.36 times more volatile than Page Industries Limited. It trades about -0.07 of its potential returns per unit of risk. Page Industries Limited is currently generating about -0.11 per unit of risk. If you would invest  97,520  in Chalet Hotels Limited on December 25, 2024 and sell it today you would lose (11,100) from holding Chalet Hotels Limited or give up 11.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Chalet Hotels Limited  vs.  Page Industries Limited

Chalet Hotels Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chalet Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Page Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Page Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Chalet Hotels and Page Industries

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

The idea behind Chalet Hotels Limited and Page 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.