Correlation Between Dalata Hotel and State Street

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

Diversification Opportunities for Dalata Hotel and State Street

0.82

Correlation Coefficient

Dalata Hotel  State Street

Very poor diversification

The 3 months correlation between Dalata and State is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and State Street go up and down completely randomly.

Pair Corralation between Dalata Hotel and State Street

Assuming the 90 days horizon Dalata Hotel is expected to generate 1.81 times less return on investment than State Street. In addition to that, Dalata Hotel is 1.29 times more volatile than State Street. It trades about 0.1 of its total potential returns per unit of risk. State Street is currently generating about 0.23 per unit of volatility. If you would invest  8,400  in State Street on October 6, 2024 and sell it today you would earn a total of  1,118  from holding State Street or generate 13.31% return on investment over 90 days.

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

Dalata Hotel Group  vs.  State Street

Dalata Hotel Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dalata Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

State Street

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in State Street are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, State Street reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dalata Hotel and State Street

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

The idea behind Dalata Hotel Group and State Street 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.