Correlation Between Hemisphere Properties and EIH Associated

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

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

Diversification Opportunities for Hemisphere Properties and EIH Associated

0.45

Correlation Coefficient

Hemisphere Properties  EIH Associated

Very weak diversification

The 3 months correlation between Hemisphere and EIH is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Properties India and EIH Associated Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIH Associated Hotels and Hemisphere Properties 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 Hemisphere Properties India are associated (or correlated) with EIH Associated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIH Associated Hotels has no effect on the direction of Hemisphere Properties i.e., Hemisphere Properties and EIH Associated go up and down completely randomly.

Pair Corralation between Hemisphere Properties and EIH Associated

Assuming the 90 days trading horizon Hemisphere Properties India is expected to under-perform the EIH Associated. In addition to that, Hemisphere Properties is 1.06 times more volatile than EIH Associated Hotels. It trades about -0.06 of its total potential returns per unit of risk. EIH Associated Hotels is currently generating about -0.02 per unit of volatility. If you would invest  42,740  in EIH Associated Hotels on September 12, 2024 and sell it today you would lose (1,980) from holding EIH Associated Hotels or give up 4.63% of portfolio value over 90 days.

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

Hemisphere Properties India  vs.  EIH Associated Hotels

Hemisphere Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hemisphere Properties India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

EIH Associated Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hemisphere Properties and EIH Associated

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

The idea behind Hemisphere Properties India and EIH Associated Hotels 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..