Correlation Between Indian Hotels and Radaan Mediaworks

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

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

Diversification Opportunities for Indian Hotels and Radaan Mediaworks

0.94

Correlation Coefficient

Indian Hotels  Radaan Mediaworks

Almost no diversification

The 3 months correlation between Indian and Radaan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Indian Hotels and Radaan Mediaworks India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radaan Mediaworks India and Indian 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 The Indian Hotels are associated (or correlated) with Radaan Mediaworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radaan Mediaworks India has no effect on the direction of Indian Hotels i.e., Indian Hotels and Radaan Mediaworks go up and down completely randomly.

Pair Corralation between Indian Hotels and Radaan Mediaworks

Assuming the 90 days trading horizon Indian Hotels is expected to generate 1.91 times less return on investment than Radaan Mediaworks. But when comparing it to its historical volatility, The Indian Hotels is 1.51 times less risky than Radaan Mediaworks. It trades about 0.14 of its potential returns per unit of risk. Radaan Mediaworks India is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Radaan Mediaworks India on October 1, 2024 and sell it today you would earn a total of  508.00  from holding Radaan Mediaworks India or generate 230.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.59%
Values	Daily Returns

The Indian Hotels  vs.  Radaan Mediaworks India

Indian Hotels

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Indian Hotels are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Indian Hotels exhibited solid returns over the last few months and may actually be approaching a breakup point.

Radaan Mediaworks India

Risk-Adjusted Performance

39 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Radaan Mediaworks India are ranked lower than 39 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Radaan Mediaworks sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indian Hotels and Radaan Mediaworks

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

The idea behind The Indian Hotels and Radaan Mediaworks India 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.