Correlation Between IKEJA HOTELS and GOLDLINK INSURANCE

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

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

Diversification Opportunities for IKEJA HOTELS and GOLDLINK INSURANCE

0.0

Correlation Coefficient

IKEJA HOTELS  GOLDLINK INSURANCE

Pay attention - limited upside

The 3 months correlation between IKEJA and GOLDLINK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IKEJA HOTELS PLC and GOLDLINK INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDLINK INSURANCE PLC and IKEJA 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 IKEJA HOTELS PLC are associated (or correlated) with GOLDLINK INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDLINK INSURANCE PLC has no effect on the direction of IKEJA HOTELS i.e., IKEJA HOTELS and GOLDLINK INSURANCE go up and down completely randomly.

Pair Corralation between IKEJA HOTELS and GOLDLINK INSURANCE

If you would invest  126.00  in IKEJA HOTELS PLC on November 20, 2024 and sell it today you would earn a total of  1,134  from holding IKEJA HOTELS PLC or generate 900.0% return on investment over 90 days.

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

IKEJA HOTELS PLC  vs.  GOLDLINK INSURANCE PLC

IKEJA HOTELS PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IKEJA HOTELS PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, IKEJA HOTELS displayed solid returns over the last few months and may actually be approaching a breakup point.

GOLDLINK INSURANCE PLC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IKEJA HOTELS and GOLDLINK INSURANCE

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

The idea behind IKEJA HOTELS PLC and GOLDLINK INSURANCE PLC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.