Correlation Between Dalata Hotel and Sabre Insurance

Can any of the company-specific risk be diversified away by investing in both Dalata Hotel and Sabre Insurance 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 Sabre Insurance 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 Sabre Insurance Group, you can compare the effects of market volatilities on Dalata Hotel and Sabre Insurance 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 Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalata Hotel and Sabre Insurance.

Diversification Opportunities for Dalata Hotel and Sabre Insurance

0.06

Correlation Coefficient

Dalata Hotel  Sabre Insurance

Significant diversification

The 3 months correlation between Dalata and Sabre is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group 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 Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and Sabre Insurance go up and down completely randomly.

Pair Corralation between Dalata Hotel and Sabre Insurance

Assuming the 90 days trading horizon Dalata Hotel Group is expected to generate 0.95 times more return on investment than Sabre Insurance. However, Dalata Hotel Group is 1.05 times less risky than Sabre Insurance. It trades about 0.12 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.05 per unit of risk. If you would invest  38,500  in Dalata Hotel Group on October 26, 2024 and sell it today you would earn a total of  1,000.00  from holding Dalata Hotel Group or generate 2.6% return on investment over 90 days.

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

Dalata Hotel Group  vs.  Sabre Insurance Group

Dalata Hotel Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Dalata Hotel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sabre Insurance Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Insurance Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dalata Hotel and Sabre Insurance

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

The idea behind Dalata Hotel Group and Sabre Insurance 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.