Correlation Between EIH Associated and DJ Mediaprint

Can any of the company-specific risk be diversified away by investing in both EIH Associated and DJ Mediaprint 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 EIH Associated and DJ Mediaprint into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EIH Associated Hotels and DJ Mediaprint Logistics, you can compare the effects of market volatilities on EIH Associated and DJ Mediaprint 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 EIH Associated with a short position of DJ Mediaprint. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIH Associated and DJ Mediaprint.

Diversification Opportunities for EIH Associated and DJ Mediaprint

0.76

Correlation Coefficient

EIH Associated  DJ Mediaprint

Poor diversification

The 3 months correlation between EIH and DJML is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding EIH Associated Hotels and DJ Mediaprint Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DJ Mediaprint Logistics and EIH Associated 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 EIH Associated Hotels are associated (or correlated) with DJ Mediaprint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DJ Mediaprint Logistics has no effect on the direction of EIH Associated i.e., EIH Associated and DJ Mediaprint go up and down completely randomly.

Pair Corralation between EIH Associated and DJ Mediaprint

Assuming the 90 days trading horizon EIH Associated is expected to generate 4.76 times less return on investment than DJ Mediaprint. But when comparing it to its historical volatility, EIH Associated Hotels is 2.99 times less risky than DJ Mediaprint. It trades about 0.25 of its potential returns per unit of risk. DJ Mediaprint Logistics is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  12,859  in DJ Mediaprint Logistics on September 26, 2024 and sell it today you would earn a total of  5,004  from holding DJ Mediaprint Logistics or generate 38.91% return on investment over 90 days.

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

EIH Associated Hotels  vs.  DJ Mediaprint Logistics

EIH Associated Hotels

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EIH Associated Hotels are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, EIH Associated is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

DJ Mediaprint Logistics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DJ Mediaprint Logistics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, DJ Mediaprint unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EIH Associated and DJ Mediaprint

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

The idea behind EIH Associated Hotels and DJ Mediaprint Logistics 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.