Correlation Between Foods Inns and Byke Hospitality

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

By analyzing existing cross correlation between Foods Inns Limited and The Byke Hospitality, you can compare the effects of market volatilities on Foods Inns and Byke Hospitality 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 Foods Inns with a short position of Byke Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foods Inns and Byke Hospitality.

Diversification Opportunities for Foods Inns and Byke Hospitality

0.89

Correlation Coefficient

Foods Inns  Byke Hospitality

Very poor diversification

The 3 months correlation between Foods and Byke is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Foods Inns Limited and The Byke Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byke Hospitality and Foods Inns 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 Foods Inns Limited are associated (or correlated) with Byke Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byke Hospitality has no effect on the direction of Foods Inns i.e., Foods Inns and Byke Hospitality go up and down completely randomly.

Pair Corralation between Foods Inns and Byke Hospitality

Assuming the 90 days trading horizon Foods Inns Limited is expected to generate 1.27 times more return on investment than Byke Hospitality. However, Foods Inns is 1.27 times more volatile than The Byke Hospitality. It trades about -0.12 of its potential returns per unit of risk. The Byke Hospitality is currently generating about -0.16 per unit of risk. If you would invest  11,789  in Foods Inns Limited on December 23, 2024 and sell it today you would lose (3,482) from holding Foods Inns Limited or give up 29.54% of portfolio value over 90 days.

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

Foods Inns Limited  vs.  The Byke Hospitality

Foods Inns Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Foods Inns Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Byke Hospitality

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Byke Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Foods Inns and Byke Hospitality

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

The idea behind Foods Inns Limited and The Byke Hospitality 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.

Check out your portfolio center.

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.