Correlation Between DALATA HOTEL and Ipsen SA

Can any of the company-specific risk be diversified away by investing in both DALATA HOTEL and Ipsen SA 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 Ipsen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DALATA HOTEL and Ipsen SA, you can compare the effects of market volatilities on DALATA HOTEL and Ipsen SA 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 Ipsen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of DALATA HOTEL and Ipsen SA.

Diversification Opportunities for DALATA HOTEL and Ipsen SA

-0.09

Correlation Coefficient

DALATA HOTEL  Ipsen SA

Good diversification

The 3 months correlation between DALATA and Ipsen is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding DALATA HOTEL and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen SA 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 are associated (or correlated) with Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of DALATA HOTEL i.e., DALATA HOTEL and Ipsen SA go up and down completely randomly.

Pair Corralation between DALATA HOTEL and Ipsen SA

Assuming the 90 days trading horizon DALATA HOTEL is expected to generate 1.87 times more return on investment than Ipsen SA. However, DALATA HOTEL is 1.87 times more volatile than Ipsen SA. It trades about 0.12 of its potential returns per unit of risk. Ipsen SA is currently generating about 0.07 per unit of risk. If you would invest  380.00  in DALATA HOTEL on October 23, 2024 and sell it today you would earn a total of  72.00  from holding DALATA HOTEL or generate 18.95% return on investment over 90 days.

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

DALATA HOTEL  vs.  Ipsen SA

DALATA HOTEL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DALATA HOTEL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DALATA HOTEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ipsen SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ipsen SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Ipsen SA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DALATA HOTEL and Ipsen SA

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

The idea behind DALATA HOTEL and Ipsen SA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.