Correlation Between Dalata Hotel and Constellation Brands

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

Diversification Opportunities for Dalata Hotel and Constellation Brands

-0.3

Correlation Coefficient

Dalata Hotel  Constellation Brands

Very good diversification

The 3 months correlation between Dalata and Constellation is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and Constellation Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands 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 Constellation Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Brands has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and Constellation Brands go up and down completely randomly.

Pair Corralation between Dalata Hotel and Constellation Brands

Assuming the 90 days horizon Dalata Hotel Group is expected to generate 0.84 times more return on investment than Constellation Brands. However, Dalata Hotel Group is 1.19 times less risky than Constellation Brands. It trades about 0.13 of its potential returns per unit of risk. Constellation Brands is currently generating about -0.12 per unit of risk. If you would invest  459.00  in Dalata Hotel Group on December 24, 2024 and sell it today you would earn a total of  95.00  from holding Dalata Hotel Group or generate 20.7% return on investment over 90 days.

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

Dalata Hotel Group  vs.  Constellation Brands

Dalata Hotel Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Dalata Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

Constellation Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Constellation Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dalata Hotel and Constellation Brands

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

The idea behind Dalata Hotel Group and Constellation Brands 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..