Correlation Between Distilleries Company and HATTON NATIONAL

Can any of the company-specific risk be diversified away by investing in both Distilleries Company and HATTON NATIONAL 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 Distilleries Company and HATTON NATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Distilleries Company of and HATTON NATIONAL BANK, you can compare the effects of market volatilities on Distilleries Company and HATTON NATIONAL 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 Distilleries Company with a short position of HATTON NATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distilleries Company and HATTON NATIONAL.

Diversification Opportunities for Distilleries Company and HATTON NATIONAL

0.86

Correlation Coefficient

Distilleries Company  HATTON NATIONAL

Very poor diversification

The 3 months correlation between Distilleries and HATTON is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Distilleries Company of and HATTON NATIONAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HATTON NATIONAL BANK and Distilleries Company 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 Distilleries Company of are associated (or correlated) with HATTON NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HATTON NATIONAL BANK has no effect on the direction of Distilleries Company i.e., Distilleries Company and HATTON NATIONAL go up and down completely randomly.

Pair Corralation between Distilleries Company and HATTON NATIONAL

Assuming the 90 days trading horizon Distilleries Company is expected to generate 1.21 times less return on investment than HATTON NATIONAL. But when comparing it to its historical volatility, Distilleries Company of is 1.15 times less risky than HATTON NATIONAL. It trades about 0.32 of its potential returns per unit of risk. HATTON NATIONAL BANK is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  17,775  in HATTON NATIONAL BANK on October 20, 2024 and sell it today you would earn a total of  8,475  from holding HATTON NATIONAL BANK or generate 47.68% return on investment over 90 days.

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

Distilleries Company of  vs.  HATTON NATIONAL BANK

Distilleries Company

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Distilleries Company of are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Distilleries Company sustained solid returns over the last few months and may actually be approaching a breakup point.

HATTON NATIONAL BANK

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in HATTON NATIONAL BANK are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HATTON NATIONAL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Distilleries Company and HATTON NATIONAL

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

The idea behind Distilleries Company of and HATTON NATIONAL BANK 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.