Correlation Between Dalata Hotel and Franklin Floating

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

Diversification Opportunities for Dalata Hotel and Franklin Floating

0.8

Correlation Coefficient

Dalata Hotel  Franklin Floating

Very poor diversification

The 3 months correlation between Dalata and Franklin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and Franklin Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Floating Rate 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 Franklin Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Floating Rate has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and Franklin Floating go up and down completely randomly.

Pair Corralation between Dalata Hotel and Franklin Floating

Assuming the 90 days trading horizon Dalata Hotel Group is expected to generate 14.64 times more return on investment than Franklin Floating. However, Dalata Hotel is 14.64 times more volatile than Franklin Floating Rate. It trades about 0.14 of its potential returns per unit of risk. Franklin Floating Rate is currently generating about 0.4 per unit of risk. If you would invest  397.00  in Dalata Hotel Group on September 12, 2024 and sell it today you would earn a total of  46.00  from holding Dalata Hotel Group or generate 11.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Dalata Hotel Group  vs.  Franklin Floating Rate

Dalata Hotel Group

Risk-Adjusted Performance

10 of 100

Good

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. 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.

Franklin Floating Rate

Risk-Adjusted Performance

31 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Floating Rate are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, Franklin Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dalata Hotel and Franklin Floating

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

The idea behind Dalata Hotel Group and Franklin Floating Rate 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.