Correlation Between Coty and Dalata Hotel

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

By analyzing existing cross correlation between Coty Inc and Dalata Hotel Group, you can compare the effects of market volatilities on Coty and Dalata Hotel 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 Coty with a short position of Dalata Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and Dalata Hotel.

Diversification Opportunities for Coty and Dalata Hotel

0.0

Correlation Coefficient

Coty  Dalata Hotel

Pay attention - limited upside

The 3 months correlation between Coty and Dalata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group and Coty 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 Coty Inc are associated (or correlated) with Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of Coty i.e., Coty and Dalata Hotel go up and down completely randomly.

Pair Corralation between Coty and Dalata Hotel

Given the investment horizon of 90 days Coty Inc is expected to under-perform the Dalata Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Coty Inc is 1.04 times less risky than Dalata Hotel. The stock trades about -0.01 of its potential returns per unit of risk. The Dalata Hotel Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Dalata Hotel Group on September 23, 2024 and sell it today you would earn a total of  152.00  from holding Dalata Hotel Group or generate 45.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Coty Inc  vs.  Dalata Hotel Group

Coty Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coty Inc 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dalata Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalata Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dalata Hotel is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Coty and Dalata Hotel

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

The idea behind Coty Inc and Dalata Hotel Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.