Correlation Between Dalata Hotel and Innovative Industrial

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

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

Diversification Opportunities for Dalata Hotel and Innovative Industrial

-0.49

Correlation Coefficient

Dalata Hotel  Innovative Industrial

Very good diversification

The 3 months correlation between Dalata and Innovative is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial and Dalata Hotel 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 Dalata Hotel Group are associated (or correlated) with Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and Innovative Industrial go up and down completely randomly.

Pair Corralation between Dalata Hotel and Innovative Industrial

Assuming the 90 days trading horizon Dalata Hotel Group is expected to generate 0.59 times more return on investment than Innovative Industrial. However, Dalata Hotel Group is 1.7 times less risky than Innovative Industrial. It trades about 0.07 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about -0.15 per unit of risk. If you would invest  37,500  in Dalata Hotel Group on December 4, 2024 and sell it today you would earn a total of  3,000  from holding Dalata Hotel Group or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Dalata Hotel Group  vs.  Innovative Industrial Properti

Dalata Hotel Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Dalata Hotel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Innovative Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovative Industrial Properties 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 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.

Pair Trading with Dalata Hotel and Innovative Industrial

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

The idea behind Dalata Hotel Group and Innovative Industrial Properties 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.