Correlation Between RENUKA FOODS and Dolphin Hotels

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

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

Diversification Opportunities for RENUKA FOODS and Dolphin Hotels

0.46

Correlation Coefficient

RENUKA FOODS  Dolphin Hotels

Very weak diversification

The 3 months correlation between RENUKA and Dolphin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding RENUKA FOODS PLC and Dolphin Hotels PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Hotels PLC and RENUKA FOODS 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 RENUKA FOODS PLC are associated (or correlated) with Dolphin Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Hotels PLC has no effect on the direction of RENUKA FOODS i.e., RENUKA FOODS and Dolphin Hotels go up and down completely randomly.

Pair Corralation between RENUKA FOODS and Dolphin Hotels

Assuming the 90 days trading horizon RENUKA FOODS PLC is expected to generate 1.24 times more return on investment than Dolphin Hotels. However, RENUKA FOODS is 1.24 times more volatile than Dolphin Hotels PLC. It trades about -0.02 of its potential returns per unit of risk. Dolphin Hotels PLC is currently generating about -0.09 per unit of risk. If you would invest  1,110  in RENUKA FOODS PLC on December 26, 2024 and sell it today you would lose (70.00) from holding RENUKA FOODS PLC or give up 6.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.98%
Values	Daily Returns

RENUKA FOODS PLC  vs.  Dolphin Hotels PLC

RENUKA FOODS PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days RENUKA FOODS PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RENUKA FOODS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dolphin Hotels PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dolphin Hotels PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with RENUKA FOODS and Dolphin Hotels

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

The idea behind RENUKA FOODS PLC and Dolphin Hotels 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.