Correlation Between Galadari Hotels and Asiri Surgical

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

By analyzing existing cross correlation between Galadari Hotels Lanka and Asiri Surgical Hospital, you can compare the effects of market volatilities on Galadari Hotels and Asiri Surgical 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 Galadari Hotels with a short position of Asiri Surgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galadari Hotels and Asiri Surgical.

Diversification Opportunities for Galadari Hotels and Asiri Surgical

-0.28

Correlation Coefficient

Galadari Hotels  Asiri Surgical

Very good diversification

The 3 months correlation between Galadari and Asiri is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Galadari Hotels Lanka and Asiri Surgical Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiri Surgical Hospital and Galadari Hotels 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 Galadari Hotels Lanka are associated (or correlated) with Asiri Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiri Surgical Hospital has no effect on the direction of Galadari Hotels i.e., Galadari Hotels and Asiri Surgical go up and down completely randomly.

Pair Corralation between Galadari Hotels and Asiri Surgical

Assuming the 90 days trading horizon Galadari Hotels is expected to generate 1.21 times less return on investment than Asiri Surgical. But when comparing it to its historical volatility, Galadari Hotels Lanka is 1.3 times less risky than Asiri Surgical. It trades about 0.24 of its potential returns per unit of risk. Asiri Surgical Hospital is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Asiri Surgical Hospital on September 28, 2024 and sell it today you would earn a total of  120.00  from holding Asiri Surgical Hospital or generate 10.91% return on investment over 90 days.

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

Galadari Hotels Lanka  vs.  Asiri Surgical Hospital

Galadari Hotels Lanka

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galadari Hotels Lanka are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Galadari Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Asiri Surgical Hospital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asiri Surgical Hospital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Asiri Surgical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Galadari Hotels and Asiri Surgical

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

The idea behind Galadari Hotels Lanka and Asiri Surgical Hospital 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.