Correlation Between DEAP CAPITAL and TRANSCORP HOTELS

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

By analyzing existing cross correlation between DEAP CAPITAL MANAGEMENT and TRANSCORP HOTELS PLC, you can compare the effects of market volatilities on DEAP CAPITAL and TRANSCORP 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 DEAP CAPITAL with a short position of TRANSCORP HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEAP CAPITAL and TRANSCORP HOTELS.

Diversification Opportunities for DEAP CAPITAL and TRANSCORP HOTELS

-0.22

Correlation Coefficient

DEAP CAPITAL  TRANSCORP HOTELS

Very good diversification

The 3 months correlation between DEAP and TRANSCORP is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding DEAP CAPITAL MANAGEMENT and TRANSCORP HOTELS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSCORP HOTELS PLC and DEAP CAPITAL 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 DEAP CAPITAL MANAGEMENT are associated (or correlated) with TRANSCORP HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSCORP HOTELS PLC has no effect on the direction of DEAP CAPITAL i.e., DEAP CAPITAL and TRANSCORP HOTELS go up and down completely randomly.

Pair Corralation between DEAP CAPITAL and TRANSCORP HOTELS

Assuming the 90 days trading horizon DEAP CAPITAL MANAGEMENT is expected to under-perform the TRANSCORP HOTELS. In addition to that, DEAP CAPITAL is 2.38 times more volatile than TRANSCORP HOTELS PLC. It trades about -0.05 of its total potential returns per unit of risk. TRANSCORP HOTELS PLC is currently generating about 0.18 per unit of volatility. If you would invest  10,600  in TRANSCORP HOTELS PLC on October 24, 2024 and sell it today you would earn a total of  2,135  from holding TRANSCORP HOTELS PLC or generate 20.14% return on investment over 90 days.

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

DEAP CAPITAL MANAGEMENT  vs.  TRANSCORP HOTELS PLC

DEAP CAPITAL MANAGEMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEAP CAPITAL MANAGEMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

TRANSCORP HOTELS PLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRANSCORP HOTELS PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, TRANSCORP HOTELS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DEAP CAPITAL and TRANSCORP HOTELS

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

The idea behind DEAP CAPITAL MANAGEMENT and TRANSCORP 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.