Correlation Between Fastenal and Dalata Hotel

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

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

Diversification Opportunities for Fastenal and Dalata Hotel

0.0

Correlation Coefficient

Fastenal  Dalata Hotel

Pay attention - limited upside

The 3 months correlation between Fastenal and Dalata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group and Fastenal 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 Fastenal Company are associated (or correlated) with Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of Fastenal i.e., Fastenal and Dalata Hotel go up and down completely randomly.

Pair Corralation between Fastenal and Dalata Hotel

Given the investment horizon of 90 days Fastenal Company is expected to generate 0.66 times more return on investment than Dalata Hotel. However, Fastenal Company is 1.53 times less risky than Dalata Hotel. It trades about 0.07 of its potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.04 per unit of risk. If you would invest  4,642  in Fastenal Company on October 12, 2024 and sell it today you would earn a total of  2,652  from holding Fastenal Company or generate 57.13% return on investment over 90 days.

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

Fastenal Company  vs.  Dalata Hotel Group

Fastenal

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Fastenal Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fastenal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Dalata Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalata Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dalata Hotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fastenal and Dalata Hotel

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

The idea behind Fastenal Company and Dalata Hotel Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.