Correlation Between FDH BANK and SUNBIRD HOTELS

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

By analyzing existing cross correlation between FDH BANK PLC and SUNBIRD HOTELS TOURISM, you can compare the effects of market volatilities on FDH BANK and SUNBIRD HOTELS 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 FDH BANK with a short position of SUNBIRD HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDH BANK and SUNBIRD HOTELS.

Diversification Opportunities for FDH BANK and SUNBIRD HOTELS

-0.72

Correlation Coefficient

FDH BANK  SUNBIRD HOTELS

Pay attention - limited upside

The 3 months correlation between FDH and SUNBIRD is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding FDH BANK PLC and SUNBIRD HOTELS TOURISM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNBIRD HOTELS TOURISM and FDH BANK 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 FDH BANK PLC are associated (or correlated) with SUNBIRD HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNBIRD HOTELS TOURISM has no effect on the direction of FDH BANK i.e., FDH BANK and SUNBIRD HOTELS go up and down completely randomly.

Pair Corralation between FDH BANK and SUNBIRD HOTELS

Assuming the 90 days trading horizon FDH BANK PLC is expected to generate 3.71 times more return on investment than SUNBIRD HOTELS. However, FDH BANK is 3.71 times more volatile than SUNBIRD HOTELS TOURISM. It trades about 0.26 of its potential returns per unit of risk. SUNBIRD HOTELS TOURISM is currently generating about 0.1 per unit of risk. If you would invest  7,455  in FDH BANK PLC on September 12, 2024 and sell it today you would earn a total of  7,386  from holding FDH BANK PLC or generate 99.07% return on investment over 90 days.

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

FDH BANK PLC  vs.  SUNBIRD HOTELS TOURISM

FDH BANK PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

SUNBIRD HOTELS TOURISM

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SUNBIRD HOTELS TOURISM are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, SUNBIRD HOTELS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FDH BANK and SUNBIRD HOTELS

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

The idea behind FDH BANK PLC and SUNBIRD HOTELS TOURISM 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.