Correlation Between Dalata Hotel and KLP AksjeGlobal

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

Diversification Opportunities for Dalata Hotel and KLP AksjeGlobal

0.74

Correlation Coefficient

Dalata Hotel  KLP AksjeGlobal

Poor diversification

The 3 months correlation between Dalata and KLP is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and KLP AksjeGlobal Indeks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLP AksjeGlobal Indeks 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 KLP AksjeGlobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLP AksjeGlobal Indeks has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and KLP AksjeGlobal go up and down completely randomly.

Pair Corralation between Dalata Hotel and KLP AksjeGlobal

Assuming the 90 days trading horizon Dalata Hotel Group is expected to under-perform the KLP AksjeGlobal. In addition to that, Dalata Hotel is 3.74 times more volatile than KLP AksjeGlobal Indeks. It trades about -0.05 of its total potential returns per unit of risk. KLP AksjeGlobal Indeks is currently generating about 0.52 per unit of volatility. If you would invest  400,888  in KLP AksjeGlobal Indeks on September 17, 2024 and sell it today you would earn a total of  12,882  from holding KLP AksjeGlobal Indeks or generate 3.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.48%
Values	Daily Returns

Dalata Hotel Group  vs.  KLP AksjeGlobal Indeks

Dalata Hotel Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Dalata Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KLP AksjeGlobal Indeks

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KLP AksjeGlobal Indeks are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, KLP AksjeGlobal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dalata Hotel and KLP AksjeGlobal

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

The idea behind Dalata Hotel Group and KLP AksjeGlobal Indeks 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.