Correlation Between Hotel Property and Chilwa Minerals

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

By analyzing existing cross correlation between Hotel Property Investments and Chilwa Minerals Limited, you can compare the effects of market volatilities on Hotel Property and Chilwa Minerals 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 Hotel Property with a short position of Chilwa Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and Chilwa Minerals.

Diversification Opportunities for Hotel Property and Chilwa Minerals

-0.76

Correlation Coefficient

Hotel Property  Chilwa Minerals

Pay attention - limited upside

The 3 months correlation between Hotel and Chilwa is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and Chilwa Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chilwa Minerals and Hotel Property 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 Hotel Property Investments are associated (or correlated) with Chilwa Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chilwa Minerals has no effect on the direction of Hotel Property i.e., Hotel Property and Chilwa Minerals go up and down completely randomly.

Pair Corralation between Hotel Property and Chilwa Minerals

Assuming the 90 days trading horizon Hotel Property is expected to generate 6.0 times less return on investment than Chilwa Minerals. But when comparing it to its historical volatility, Hotel Property Investments is 4.44 times less risky than Chilwa Minerals. It trades about 0.1 of its potential returns per unit of risk. Chilwa Minerals Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Chilwa Minerals Limited on October 24, 2024 and sell it today you would earn a total of  65.00  from holding Chilwa Minerals Limited or generate 382.35% return on investment over 90 days.

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

Hotel Property Investments  vs.  Chilwa Minerals Limited

Hotel Property Inves

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Property Investments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Hotel Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Chilwa Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hotel Property and Chilwa Minerals

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

The idea behind Hotel Property Investments and Chilwa Minerals Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.